Fri, Jun 24, 2011 - Page 12 News List

Commercial real- estate prices rise, vacancy rate drops

By Crystal Hsu  /  Staff Reporter

The commercial property market appears unaffected by the introduction of a luxury tax this quarter, with the average transaction price inching up from the preceding quarter, while the vacancy rate edged down on recovering demand, a report said yesterday.

The average transaction price for office space nationwide reached NT$708,900 (US$24,444) per ping (3.3m2) this quarter as of Wednesday, up slightly from NT$690,000 three months earlier, as investors returned to the market, according to a survey by the global asset management division of Sinyi Realty Co (信義房屋), the nation’s only listed broker.

Overall commercial property transactions this quarter as of Wednesday reached NT$18.2 billion, with investors turning cautious in April and early last month, before regaining confidence this month amid sound economic fundamentals, Sinyi account manager Michael Wang (王維宏) said by telephone.

Commercial transactions in the first quarter reached NT$26.1 billion, the report showed.

“The luxury tax sidelined investors in the first half of this quarter, but they returned to the market later” because they needed a place to park their funds given abundant liquidity, Wang said.

Fubon Life Insurance Co (富邦人壽), the life insurance arm of Fubon Financial Holding Co (富邦金控), won the bid for three lower floors in a building on Zhongxiao E Road last month with a bid of NT$2.01 billion — more than double the asking price.

A Hong Kong investment firm won the auction for nine higher floors in the same building with an offer of NT$2.13 billion.

The outcome of the auction reflected healthy demand for commercial real estate properties in prime locations, Wang said.

The turnover for this quarter may further pick up with the auction next week of an estimated NT$4 billion in office space in Taipei’s Neihu District (內湖), he said.

Meanwhile, the vacancy rate for office space dropped to 11.34 percent in the second quarter, compared with 12.13 percent three months earlier, as demand for Grade-B office floors recovered, the report said.

The vacancy rate for Grade-B office space fell to 7.79 percent this quarter, from 9.06 percent in the previous quarter, as recovering business activity among domestic firms boosted demand, Wang said.

“The trend reflected an increasing need for office space, as the unemployment rate dropped to nearly a three-year low last month,” he said.

While foreign companies favor Grade-A office floors to highlight their presence in Taiwan, domestic firms prefer Grade-B office space to save money, Wang said.

The expected influx of independent Chinese tourists also fueled the optimism, prompting investors to turn idle, old buildings into affordable hotels, Wang said.

Average rentals were NT$1,932 per month this quarter, picking up modestly from NT$1,918 three months earlier, with rental yields steady at 2.7 percent, the report said.

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