The leasing market for upscale offices in Taipei has shown resilience, favoring landlords, despite an economic slowdown and a surge in COVID-19 cases, property consultancy Knight Frank LLP said in a report yesterday.
Taipei, Seoul and Ho Chi Minh City, Vietnam, were the only three cities among 23 analyzed in the region where demand for “grade A” office space was strong in the first half, the report said, adding that the others showed cautious sentiment.
Seoul was the top performer by vacancy rate at 1.6 percent last quarter, followed by Taipei’s 2.43 percent as the effects of the COVID-19 outbreak faded, it said.
Photo: Hsu Yi-ping, Taipei Times
Vacancy rates were 45 percent in Phnom Penh, 28 percent in Kuala Lumpur, 27 percent in Jakarta, 20 percent in Mumbai, India, 19 percent in Manila and above 10 percent in China’s tier-one cities, Knight Frank said, adding that the numbers meant tenants had the upper hand in those markets.
A tech boom in the local market pushed the vacancy rate down to 1.9 percent last quarter, making Taipei one of the few cities with a positive cyclical movement, even amid a spike in virus cases, it said.
Average rent for grade A offices in Taipei rose 1 percent in the April-to-June period, accelerating from a 0.8 percent increase in the first quarter, Knight Frank said.
The trend suggests an end to rent corrections of 7 percent earlier in the pandemic, it said.
Rent rates have returned to pre-outbreak levels in more than 50 percent of the Taipei areas it analyzed, the report said.
For the whole of this year, rent increases might surpass 2 percent, it said.
Taipei had a healthy showing even with some cryptocurrency firms downsizing or exiting the market amid wild financial market swings, interest rate hikes and rising inflation, it said.
Monthly rents averaged NT$4,039 per ping (3.3m2) in the city’s prime Xinyi District (信義), up from NT$3,847 per ping three months earlier, it said.
The leasing market in Taipei would remain vibrant, as labor shortages and price increases for building materials have prompted developers to suspend or postpone construction of new office buildings, which would ease rent correction pressure compared with if a large supply were to become available next year, Knight Frank said.
A full reopening of Taiwan’s borders would help attract foreign investment, boosting demand for office space, it said.
In the meantime, landlords are adopting coworking business models to enhance floor efficiency and rent income, it said.
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