Commercial property transactions totaled NT$9.36 billion (US$306 million) last quarter, a 60 percent decline from the same period last year and worse than during the local financial crisis in 2009, but the market could see exciting developments in the second half of the year, Jones Lang LaSalle Inc (JLL) said yesterday.
The figure also marked a 12.1 percent increase from three months earlier, driven mainly by self-occupancy demand among local firms, the international property broker said.
“Low return and policy uncertainty at home and abroad have weighed on the local market despite an abundance of liquidity,” JLL Taiwan managing director Tony Chao (趙正義) told a media briefing.
Self-occupancy demand drove 70 percent of the trading volume in the April to June period, as investors stayed on the sidelines, Chao said.
Taiwan has the lowest return in the world of between 2 percent and 2.5 percent, as sellers have deep pockets and refuse to make drastic concessions over property prices despite sluggish trade.
Land deals totaled NT$11.9 billion last quarter, an improvement of 30 percent from the same period last year, as developers and builders recovered some confidence after the government halted unfavorable rhetoric.
While the market might see limited change for the rest of the year, negotiations for landmark deals are under way and might gain significant headway this quarter, Chao said.
JLL Taiwan won a tender to organize international bidding for a high-profile build-operate-transfer development project near the Taipei Railway Station, and domestic life insurance companies and foreign funds have voiced strong interest, Chao said.
The consultancy could finalize development terms this quarter for the project known as “Taipei Twin Towers” (台北雙子星大樓) after holding more meetings with minor owners and the city government, Chao said, adding that the development project would require NT$5 billion to NT$60 billion and winners do not have to stand by former requirements.
The city government has drawn a blueprint for the project, the center of bribery scandals for the past 20 years.
JLL Taiwan, also the largest broker of Grade-A offices in Taipei, said vacancy rates dropped to 7.9 percent last quarter, while rental rates held steady in the second quarter.
The average rent hovered around NT$2,644 per ping (3.3m2) for Grade-A offices, with rates rising to NT$3,109 for the city’s prime real-estate in Xinyi District (信義), JLL associate market director Brian Liu (劉建宇) said.
Vacancy rates could climb higher as new skyscrapers such as the Taipei Nan Shen Plaza (臺北南山廣場) join the market, increasing the total supply by 37,000 ping after factoring in space reserved for self-occupancy, Liu said.
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