The commercial property market posted a sluggish showing in the first half of this year, with volume dropping 50 percent from a year earlier on concerns that rising inflation and interest rates would erode profit margins, an international real estate adviser said yesterday.
The downward trend is expected to last into the second half of the year as investors have adopted a wait-and-see attitude, DTZ Debenham Tie Leung International Property Advisers (戴德梁行) said.
“Property trade totaled only NT$37.8 billion [US$1.24 million] for the first six months, down 50 percent for the same period last year,” DTZ general manager Billy Yen (顏炳立) said. “People prefer not to invest when expected returns are low.”
Mounting fuel costs and interest rates have dampened investor interest, he said, but the price gap is also hurting.
Expectations of a boom following President Ma Ying-jeou’s (馬英九) administration taking office caused sellers to overprice their properties, encouraged by Ma’s campaign pledge to allow Chinese capital to invest in local commercial properties.
Yen said foreign investors, who played an active part in boosting the property market last year, have stayed away this year except for the purchase by CITADALE of a building in Hsinchu County.
The private fund from Singapore acquired the property from Mei Fu Construction Co (美孚建設) for US$158 million, Yen said.
He said foreign investors will remain cautious and limit their business to market assessments for the rest of the year. In the future, foreign investors may choose to buy properties that promise low but stable returns, or enter into joint ventures with local developers, he said.
He said several investors from Hong Kong and Singapore have expressed interest in land near MRT stations in Taipei City and Taipei County, but said he hasn’t seen any sign that the market will benefit soon from the relaxation of rules governing cross-strait trade.
“The expected inflow of Chinese capital remains nothing but empty talk,” Yen said. “They [Chinese investors] will conduct market surveys before entering into any deal. I don’t expect any transactions to take place this year.”
He said next month’s bidding for the right to lease state-owned land in the Xinyi District would be a test of the market’s outlook. The plot, measuring 6,373m², is estimated to cost NT$615,000 per square meter, the Ministry of Finance has said.
The auction should attract many bidders, proving the exception to the gloomly market, he said.
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