The commercial property market might recover mildly this quarter as some developers start to build inventory and others come under pressure to digest idle funds, international property consultancy CBRE Taiwan said yesterday.
“While the market remains soft, we have spotted signs of a recovery,” CBRE Taiwan managing director Joseph Lin (林俊銘) told a media briefing, pointing to the auctions on Tuesday of land near the high speed railway stations in Taoyuan, Hsinchu, Taichung and Tainan.
Cathay Life Insurance Co (國泰人壽), the nation’s largest insurer by assets and market share, won three lots in Taoyuan and Hsinchu for a total of NT$3.12 billion (US$99.45 million), with plans to develop commercial space later, Lin said.
The deal lent further support to the view that domestic life insurers have recovered their interest in local real estate after four interest rate cuts lowered the minimum yield requirement to 2.345 percent.
Last quarter, Fubon Life Insurance Co (富邦人壽) acquired an office building in Taipei’s Neihu District (內湖) for NT$4.08 billion, Lin said.
Life insurers have sought to increase real-estate stakes at home and abroad that can meet yield requirements and gain in capital value — an increasingly difficult task after major central banks cut interest rates to spur growth, which has constrained profitability.
Sakura Development Co (櫻花建設) acquired a residential plot in Taichung for NT$253.66 million, while Fabulous Group (將捷建設) bought another plot for NT$739.88 million, government data showed.
Sakura Development beat 12 rivals by offering a 47 percent premium over the floor price, indicating strong demand for real estate in prime locations, Lin said.
Builders are likely to develop these lots into apartment complexes, but might delay their launch until the housing market has regained more confidence, Lin said.
Commercial property sales — including land deals — could reach NT$90 billion for the full year, after hitting NT$37.2 billion last quarter, CBRE Taiwan said.
This represented an increase of 11 percent from the same period last year, the local unit of the California-based broker said.
Domestic developers have increasingly turned their attention to Southeast Asia, especially Vietnam, in a bid to take advantage of the government’s “new southbound policy,” Lin said.
The policy aims to guide Taiwanese exporters to diversify their product lines and markets outside of China.
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