Low interests rates are prompting companies to consider investing in commercial property again, according to the local branch of CB Richard Ellis Ltd (
"Leasing and buying activities for office buildings are on the rise," the company's managing director, Andrew Liu (劉學龍), said yesterday. "The office market may see 5 percent rise in rents this year."
According to CB Richard Ellis, the monthly rents in six major commercial districts in Taipei averaged NT$1,960 per ping in the fourth quarter last year -- down by 9.21 percent from a year earlier.
The Hsinyi district in east Taipei, where rents fell by 2.92 percent over the year, weathered the difficult conditions the best.
Despite the improving sentiment, the vacancy rate for grade-A office space in Taipei may still remain high with the opening of Taipei 101 in October, releasing 60,000 ping of new office space onto the market, Liu said.
The capital city's vacancy rate in grade-A offices rose from 2.77 percent in 2001 to 4.27 percent last year. The supply increased by 12 percent, or 34,200 pings, in 2003, according to CB Richard Ellis.
Liu said that he believed that Taipei 101 would have only a limited impact on the commercial property market since the skyscraper is expected to attract only multinationals and high-tech companies.
Liu estimated that it may take three years for Taipei 101 to fill up, adding that its monthly rent may level out at around NT$3,200 per ping, although discounted prices may be offered to larger tenants.
The expected property market recovery is sure to boost investors' confidence in securitization products based on the rents of commercial buildings that offer fixed returns of up to 5 percent.
Liu expects foreign investors increase investment in commercial mortgage-backed securitization certificates, which are low-risk and have guaranteed returns.
"As the non-performing loan market slows down, the securitization market will be another option to attract foreign investments, especially from insurers," Liu said.
Property investments also began to pick up from last year.
According to CB Richard Ellis, 27 property deals priced at more than NT$350 million each were closed last year for a total of NT$44.8 billion.
The average closing price has fallen from a high of NT$4.13 million per ping in 1998 to NT$2.27 million per ping in a deal closed recently.
"The depressed land price is unlikely to rebound to its highs of 1997," Liu concluded.
CB Richard Ellis yesterday also released its top 10 ranking for Taipei office buildings in terms of location, building image, management and rents.
Of the 83 buildings it considered, CB Richards Ellis included in its top 10 list, in no particular order, Aurora Intelligent Building, Cathay Hsinyi Trading Center, Continental Engineering Corp (CEC,
Among them, Taipei Metro has the highest month rent, averaging NT$3,800 per ping. Hung Tai Century Building, CEC Minsheng Building and Aurora Intelligent Building are fully occupied.
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