Commercial property transactions in the first quarter shrank 63 percent from a year earlier, while land deals plunged 73 percent, as economic weakness and interest rate hikes sidelined life insurers and developers, property consultancy Colliers International Taiwan (高力國際) said on Monday last week.
Commercial property transactions — including for offices, factories, and logistics and warehousing facilities — totaled NT$15 billion (US$492.55 million) in the first quarter, down 63 percent year-on-year, Colliers said, citing an internal survey.
Office buildings took the hardest hit, with trading volume tumbling by 87 percent to slightly more than NT$2 billion, compared with NT$17 billion a year earlier, the consultancy said.
Photo: Hsu Yi-ping, Taipei Times
Topco Scientific Co (崇越科技), which distributes semiconductor materials, bought an office complex in Taipei’s Neihu District (內湖) for NT$5.4 billion, making it the largest deal with a 42 percent share of quarterly trading volume, Colliers said.
That is because prospective buyers turned cautious and adopted a wait-and-see attitude before the market sheds more light on future directions, it added.
The conservative approach was especially evident with domestic life insurers, the main players that spent more than NT$20 billion a year earlier, but contributed less than NT$2 billion, Colliers said.
The five interest rate hikes by the central bank since March last year bolstered the minimum yield threshold on real-estate investment by life insurers to 2.845 percent, significantly limiting the pool of investment targets in light of soaring prices across Taiwan in recent years, it said.
Against that backdrop, institutional investors shifted their attention to Taipei, Colliers said, adding that the city showed resiliency as property prices in other locations grow susceptible to corrections.
Land deals, a leading indicator of future property development projects, dwindled 73 percent annually to NT$14.5 billion in the first quarter as developers refrained from buying stock, it said.
Residential and commercial plots slumped 80 percent to NT$6.1 billion and NT$3.5 billion respectively, while industrial lots fell 43 percent to NT$3.4 billion, it said.
Taichung land deals in the first quarter saw a sharp 93 percent decline to NT$390 million, compared with other cities and counties in the nation, Colliers said.
The consultancy attributed the decline in land deals to the central bank having imposed selective credit controls on banks, which not only tightened financing terms, but raised investment and holding costs for potential land developers.
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