Taiwan’s commercial property market nosedived 68 percent year-on-year to NT$7.2 billion (US$236.57 million) last quarter, as soaring property prices drove main players to look for investment opportunities abroad, analysts said yesterday.
The volume represented the lowest level since the height of the global financial crisis in 2009, increasing pressures for a price correction.
“The market remained sluggish last quarter due to a persistent price gap between sellers and buyers, while big players stayed on the sidelines,” Colliers International Taiwan, the local office of a US-based property consultancy company, said in a quarterly report.
Factory and office buildings accounted for 40 percent and 34 percent — or NT$2.91 billion and NT$2.48 billion — respectively, of the total trading volume between January and last month, the Colliers International report said.
Local cancer-medicine developer GlycoNex Inc (台灣醣聯) and hardware maker Yee Kun Machine Industrial Co (易坤) bought office space in New Taipei City’s Sijhih District (汐止) for NT$870 million and NT$522 million respectively, the report said.
Life insurance companies, while keen to increase their stakes in real-estate investments, contributed 30 percent of deals in the past quarter, the report showed.
Nan Shan Life Insurance Co (南山人壽) bought office space for NT$1.31 billion in Taoyuan County, while Mercuries Life Insurance Co (三商美邦人壽) spent NT$820 million acquiring office space in Greater Kaohsiung.
The results reflected a sustained flow of property funds away from Taipei to New Taipei City and other parts of the country, as price hikes in the capital raised the difficulty of meeting yield thresholds, the report said.
Land transactions fared less drab at NT$28 billion last quarter, down 14 percent from a year ago, a separate report by CBRE Taiwan found.
Land developers drove more than 50 percent of the deals and spent NT$15.3 billion, showing that they remain active in building land stock, CBRE Taiwan managing director Joseph Lin (林俊銘) said in a report.
The move is wise given the growing scarcity and costs of land supply in good locations, especially in Taipei, Lin said.
Farglory Land Development Co (遠雄建設) and Rich Development Inc (力麒建設) spent a combined NT$5.25 billion in acquiring plots in Taipei and Greater Taichung intended for urban renewal projects, the report said.
Fubon Life Insurance Co (富邦人壽) won superficies rights on a plot of land on Taipei’s Longjiang Road for NT$6.6 billion.
Looking ahead, the commercial property market may not come out of the woods anytime soon, the two brokers said, given the limited supply and outflow of property funds.
Life insurers, in particular, may shift funds abroad where property investments generate higher returns, they said, adding that regulatory easing lends support to the move.
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