Activity in Taiwan’s commercial property market has fallen by 68 per cent year-on-year, a report claims, and soaring prices are being blamed for the decline.
The sales volume represented the lowest level since the financial crisis reached its peak in 2009 and has increased pressure for a price correction.
According to Colliers International Taiwan, the market has remained sluggish over the last quarter due to a “persistent price gap” between sellers and buyers.
Factory and office buildings made up 40 per cent and 34 per respectively, of total transactions between January and March.
Life insurance companies were very active in the market and were involved in 30 per cent of deals in the first three months of the year. However many are looking abroad where they can generate higher levels of returns.
These results reflected the flow of property funds away from Taipei to New Taipei City and other parts of Taiwan. Price increase in the capital increased the difficulty of meeting yield thresholds, according to the report.
Land transactions have fared better in the last quarter although total volumes were down 14 per cent from 12 months ago, a separate report from CBRE Taiwan reveals. This is perhaps due to the growing scarcity of land in good locations.
Rich Development Co and Farglory Land Development Co invested heavily acquiring land in Taipei and Greater Taichung. The plots are earmarked for urban renewal projects.
Overall, the commercial property market still has some challenges ahead, given the limited inventory available and the outflow of property funds.
