The commercial property market staged a strong rebound last quarter, driven mainly by owner-occupancy demand, but the momentum might not be sustained if major players sit on the sidelines amid unfavorable policy moves, brokers said.
Commercial property transactions totaled NT$65.4 billion (US$2.18 billion) during the April-to-June period, an increase of 81 percent from the previous quarter and 16 percent from a year earlier, CBRE Taiwan said, though peers had different figures due to different measurements.
Property consultancies generally limit their survey to deals above certain values.
Investment value would amount to NT$25.3 billion alone if land deals were taken out of the survey, more than double the sum a year earlier, CBRE said.
The consultancy attributed the steep pickup to a recovery in demand for office, factory, hotel and retail space among the technology and retail sectors, though rental yield hovered around 2.2 percent, the lowest in the world, CBRE said.
Adata Technology Inc (威剛科技), DigiLife Technologies Co (台灣微米) and Key Systems Corp (昆盈企業) bought office space in Jhonghe (中和) and Neihu districts (內湖) respectively to meet demand for expanded operations, according to Colliers International, a foreign property broker.
Meanwhile, financial institutions increased real-estate stakes despite tightened investment restrictions, as seen by the purchase by Mercuries Life Insurance Co (三商美邦人壽保險) of a retail building in Ximen District (西門) for NT$3.95 billion, Colliers said.
Alpha Investment Partners, a private equity fund from Singapore, bought an old, idle building on Chingcheng Street of downtown Taipei, reportedly for more than NT$10 billion from the owner of Howard Hotel (福華飯店), Colliers said.
The rebound is not sustainable given the soaring property prices and the government’s continued effort to cool the sector, CBRE Taiwan managing director Joseph Lin (林俊銘) said.
“The market looks poised for a price correction as financial and monetary authorities raise tax burdens on property owners and tighten lending terms,” Lin said, adding that the trend may deepen toward the elections of local administrators in November.
Against the backdrop, life insurers are increasingly steering funds to leasehold deals as well as logistics and tourism businesses, said Jones Lang LaSalle, another international consultancy.
Fubon Life Insurance Co (富邦人壽) won a 50-year leasehold contract for NT$17.28 billion to build an integrated commercial building on a plot of land in the prime Xinyi District (信義) only after the Taipei City Government lowered the asking price by 30 percent.
The plot failed to attract any bidders in three previous auctions, and Fubon was the sole contender in the fourth attempt.
“Joint ventures — featuring private funds to develop government-owned land — might carry significant weight in the property market with land supply diminishing in central locations,” said Tony Chao (趙正義), Jones Lang LaSalle managing director in Taiwan.
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