Sales of commercial properties are regaining liquidity-driven momentum, although Taipei City’s grade-A office rental market hasn’t hit bottom yet, two property advisers said yesterday.
After commercial properties worth NT$63.2 billion (US$1.96 billion) closed in the first three quarters, DTZ (戴德梁行) forecast total sales this year might exceed NT$80 billion if the liquidation of the five-star Agora Garden (亞太會館) — which has a floor price of NT$15 billion — can be completed by the end of the year.
DTZ general manager Billy Yen (顏炳立) was optimistic, projecting total sales might reach NT$100 billion this year. Last year sales reached NT$94.7 billion.
“There is no more bad news except for the global financial turmoil. All is good news for the nation’s commercial property market, which will see another boom after Chinese investors are allowed in,” Yen said.
A Hong Kong land developer and a local business firm have agreed to enter negotiations for the Agora Garden late this month, he said.
Yen estimated prices of the land deal, luxury homes and commercial properties in Taipei, including industrial-office properties in Neihu, would see a 10 percent to 15 percent hike long before Chinese investors are allowed in.
The office building sector, which saw a brief correction before January, will continue to rise after the entry of Chinese buyers, he said.
Sherry Wu (吳瑤華), director of Jones Lang LaSalle’s (仲量聯行) commercial property market, however, said foreign buyers have largely left the commercial real-estate market as investment destinations are generating a lower return of between 2.5 percent and 3 percent because competition drove up closing prices.
“Foreign buyers have mostly given up on local properties since they can easily find properties with a 6 percent to 7 percent return elsewhere to invest in,” Wu said.
One thing both DTZ and Jones Lang LaSalle believe is that the city’s grade-A rental office market will continue to see declining rentals and rising vacancies.
A survey by Jones Lang LaSalle showed that monthly rentals of four major grade-A office districts in Taipei averaged NT$2,425 per ping (3.3m²) in the third quarter of this year, down 6.4 percent year-on-year, with a vacancy rate of 16.5 percent.
Wu said rentals of grade-A offices would drop between 10 percent and 15 percent year-on-year in the first quarter of next year before reversing its course. The vacancy rate will climb to 18 percent by the year’s end and continue to rise until 2011, she said.
In related news, Union Group (聯邦集團) plans to auction a 1,779.14-ping plot in Sinjhuang (新莊), Taipei County, on Oct. 21 with a floor price of NT$2.5 billion, DTZ said.
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