The vacancy rate for Grade A offices edged up in Taipei, while net rental rates headed down in the third quarter, as more firms relocated to more affordable business areas, international service provider Jones Land LaSalle said yesterday.
The trend is expected to continue over the next six months, as the market has yet to see significant investment from China after the signing of the Economic Cooperation Framework Agreement (ECFA) in June.
“The vacancy rate for Grade A offices picked up 0.18 percent, to 16.27 percent in the third quarter because of negative take-up in the prime Xinyi (信義) and non-core business districts,” Sherry Wu (吳瑤華), company director of investments and markets, told a media briefing.
Average net rentals dropped 1.26 percent to NT$2,200 per ping (3.3m2) in the June-to-last month period from three month earlier, as landlords continued to offer rent-free periods to attract new clients.
Wu expects the vacancy rate to rise 4 percent this quarter with an extra 11,000 ping of office space to enter the market, while more tech firms plan to move to suburban areas to cut costs.
“That increasing supply may keep effective rental rates in the negative zone through the first quarter,” she said.
“The good news is that the market is about to hit bottom and stage a comeback later [next year] as warmer ties with China will start to impact,” Wu said.
A total of 41 Chinese companies have taken up office space in Taiwan since the government lifted ban last year, Jones Land LaSalle said, citing government data.
Three of them, including the Bank of China (中國銀行) and the Bank of Communications (交通銀行), made their entrance after the signing of the trade pact.
Tony Chao (趙正義), the agency’s managing director, said investment from China would likely remain weak until next year.
The two Chinese lenders will take up less than 100 ping of office space for their representative offices, like other Chinese firms currently in Taiwan, Chao said.
“But their presence is helping attract more foreign investment here,” he said. “The market will soon shift gears.”
Many firms from China and other parts of the world have expressed interest in setting up business centers in Taiwan to explore cross-strait business opportunities, Chao said.
However, returns on office building investment sank to a record low of 2.8 percent in the third quarter, with domestic insurers finding that acceptable in order to digest idle funds, the agency’s data showed.
Buildings intended as retail sales floors generated better returns, at 3 percent to 4 percent in the third quarter, the data showed.
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