Commercial property deals remained soft in the July-to-September quarter, while land transactions showed signs of recovery as developers built land stock, the Taiwan branch of Cushman & Wakefield Co said yesterday.
Commercial property sales totaled NT$11.18 billion (US$368.54 million) this quarter, a 10 percent increase from last quarter, backed by office demand from financial and technology firms in Taipei and Taichung, the international property consultancy said.
Despite the quarterly improvement, the market is set for a historic low this year with transactions totaling NT$34.2 billion in the first nine months of the year, a 41 percent slump from the same period last year, the firm’s quarterly report said.
“The market failed to see deals of more than NT$10 billion so far. Talks of recovery are irresponsible and may not be realized anytime soon, as long as sellers refuse to concede and buyers demand concessions,” company managing director Billy Yen (顏炳立) said.
Financial and technology firms accounted for 72 percent of the trading, spurred by capacity expansion needs and regulatory easing on property investment requirements for financial institutions, Yen said.
Largan Precision Co (大立光), a smartphone camera lens supplier to Apple Inc, acquired a plot of land in Taichung for NT$1.04 billion to meet increasing market demands, the report said.
CTBC Bank (中國信託銀行) sold 3,500 ping (11,550m2) of office space in two separate buildings to affiliate CTBC Asset Management Co (中信資產管理) for NT$4.04 billion to better utilize idle assets and benefit the conglomerate’s income, it said.
Life insurers contributed a parlous NT$427 million, indicating the market is far from healing as major players stay on the sidelines, Yen said.
Land deals fared better with transactions amounting to NT$33.5 billion for the past three months, on par with five-year averages, Cushman & Wakefield’s property appraisal director Charlie Yang (楊長達) said.
Developers and builders account for almost all of the top 10 deals, an encouraging sign following an 18-month hiatus when factory deals underpinned transactions, he said.
Residential and commercial plots accounted for the bulk of land deals, suggesting recovering confidence on the part of developers and builders, he said.
“The landscape looks fair ahead with annual trading likely to reach 10-year averages of [NT]$110 billion this year,” Yang said.
Despite the sentiment uptick, price correction pressure could intensify next year and beyond, Cushman & Wakefield said.
About 67 million square meters of building floor space permits have been issued in the past few years, but only 52 million square meters of floor space entered the market, Yang said.
“That means more new buildings will enter the market, creating pressure for price corrections,” he said, adding that some builders opt to delay launches, but the tactic is not a solution.
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