Taiwan commercial real estate on a slowdown
Taiwan commercial real estate on a slowdown
Despite general market lethargy, one development is bringing home the bacon
Commercial property in Taiwan turned over NTD25.18 billion (USD776.99 million) from April to June 2016, a three-fold increase from the same period in 2015, the Taipei Times reported.
However, one big-ticket transaction mostly accounted for such impressive numbers.
Taiwan Life Insurance Co’s acquisition of a mixed-use skyscraper in Kaohsiung for NTD16.5 billion (USD510.8 million) in May has given the Taiwanese market a boost at a time when it needs it most. According to DTZ Taiwan, the purchase made up 65.5 percent of all commercial property sales in the last quarter.
Transactions with tech companies mostly accounted for the rest, with acquisitions by Powertech Technology Inc and Avalue Technology Inc among the most significant deals.
Taiwan Life Insurance Co’s new property is one of the ten tallest buildings in Taiwan, towering 42 storeys above Kaohsiung. A hotel and department store holds a 20-year lease within the building.
More: Why Taiwan’s market may be facing a long-term slump
On 30 June, Taiwan’s central bank cut its benchmark interest rate for the fourth time in nine months. Although it dragged mortgages down, the cut of 12.5 basis points has done little to break through to sellers. Property prices in Taipei remain high despite a slump in the country’s exports and significant hikes on property taxes.
Home prices have almost tripled in the last two decades, with the Taiwanese capital having a higher house-price-to-income ratio than New York City.
The standoff between sellers and buyers might not be for long though. CBRE Taiwan managing director Joseph Lin has suggested that sellers may eventually relent and slash prices by 10 percent.
In addition, DTZ Taiwan general manager Billy Yen believes that the market might see “three years of modest price corrections and an extra four years of consolidation,” the Taipei Times reported.
Read next: Where have Taipei’s real estate buyers gone?
Source: Property Report