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COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | | 8 APRIL 2020

Eilleen Liang Director | Research | +886 2 8722 8601 [email protected]

OPPORTUNITIES ACROSS TAIWAN A review of 2019’s investment trends sheds light on Taiwan’s six metros. COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

Insights & Recommendations Annual land Commercial

Although Taiwan’s economy has been sales hit NTD276.5 property affected by the US-China trade war in 2019, it also pushed manufacturing and billion in 2019, transactions totaled technology sectors to relocated partial increasing NTD138.6 billion operations back to Taiwan, increasing the demand for office, industrial office and 49.6% YOY up 70.0% YOY factories. Coupled with the low interest rates, the investment amount hit a record high in 2019. Looking forward in 2020, we Top destination for Most stable city for think uncertainties such as outbreak of COVID-19, US-China tensions, and the land investment- commercial cross-strait relations will likely impact the City property income: investment momentum especially in H1 2020. > Office: We still think the office sector is Taipei City the best opportunity for investors. Though leasing demand will likely > In 2019, land and commercial property investments grew significantly. The total sales value reached slowdown in H1 2020, with latent NTD415.1 billion (USD13.4 billion), a 56% increase compared to 2018. This is also the record high demand and a lack of supply we expect since Colliers survey started in 2007. rents and vacancy to remain stable. > Taiwan’s six metros are destinations both for investors and developers, with a total commercial > Industrial: We recommend owner- property sales value of NTD129.6 billion (USD4.2 billion), 94% of Taiwan’s total. Land sales amounted to NTD258.4 billion (USD8.4 billion ), also 94% to Taiwan’s total. occupiers look at existing industrial clusters in the five metros ex-Taipei > The industrial sector was the most active for transactions, with a total sales value of NTD56.9 billion City. Manufacturers will likely continue (USD1.8 billion). Driven by the operation, expansion and demand for logistics, Taoyuan City, a relocating to Taiwan considering manufacturing hub, had a transaction value of NTD14.3 billion (USD460 million), ranking first in COVID-19. Taiwan. For other sectors including office, retail and hotel, Taipei City contributed the largest transaction volume in Taiwan thanks to the city’s mature and stable business development. > Land: Supported by the expansion of > Government land sales in Taichung City and pushed up the number of residential manufacturing operations and land transactions, and commercial land transactions were most active in Taipei City. New Taipei City infrastructure, we recommend and Taoyuan City are important manufacturing bases in northern Taiwan, and manufacturers have commercial and residential lands in stronger demand for industrial sites, further boosting the industrial land transaction in the two cities. Taoyuan and Taichung City. Note: USD1 to NTD30.9 as of the end of Q4 2019. 1 ping= 3.3 sq m=3.6 sq ft. 2 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

OPPORTUNITES AND CHALLENGES IN THE INVESTMENT MARKET OPPORTUNITY Three plans for investing in Taiwan and repatriation of offshore capital have been implemented, likely to inject more capital in the market > NTD85.2 billion (USD2.8 billion) has been approved by the government and is scheduled to be invested for factory expansion in the next two years, creating additional 70,445 jobs in the island. > Taiwan government permits repatriation of offshore capital to purchase owner-occupied properties. We expect this will drive the demand in the next two or three years. Investors should look beyond office assets and adopt a flexible strategy to diversify investment risks > Continuing expansion of the e-commerce market is driving the demand for logistics properties. > Cloud computing and 5G make should drive growth in the data center market over the next five years. Demand for offices, industrial properties and land is likely stable > Demand and rents are stable in Taipei City and Taichung City, making the office sector a sable investment choice. > Owner-occupiers have been looking for industrial properties in New Taipei City and Taoyuan City, due to increased demand for manufacturing operation and warehousing. > Reshoring investment can increase job opportunities and commercial potentiality, pushing up land investment in Taoyuan City, Taichung City, City and City. CHALLEANGE Five major uncertainties in 2020 > A slowing global economy, the US-China trade war, regional political instability , the cross-strait relationship, and interest rates. Competition from ASEAN countries > ASEAN countries, with generally lower labor and land costs, and improvement of foreign investment regulations are major manufacturing destinations for manufacturers relocating out of China. > Taiwan lacks standing in multilateral trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP). This will likely impact GDP growth and demand for industrial land. In 2019, transaction values hit a record high in Taiwan’s six metros, which will likely be difficult to top in 2020 > Both owner-occupiers and investors were active buyers in 2019 and the capital value has rebounded since 2018. We expect transaction momentums will slow in the absence of an improving economy or additional government polices.

Source: Colliers International

3 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

DIFFERENT CHARACTERISTICS IN SIX METROS Taiwan has solid and diversified industrial clusters, with a well-developed supply chain from north to south. Taipei City is the financial, political, and business center. New Taipei City and Taoyuan City are two important manufacturing hubs in northern Taiwan. Taichung City is a center of finance and commerce and the base of precision machinery in central Taiwan. Thanks to the Southern Science Park, Tainan City and Kaohsiung City have become the economic center in southern Taiwan, and both have also actively developed their marine and seaside recreation industries. Reports from the World Economic Forum1 and International Institute for Management Development2 indicate an improvement in Taiwan’s investment environment, and we expect this will attract more investment to Taiwan.

(Key figures in Taipei City New Taipei Taoyuan City Taichung City Tainan City Kaohsiung blue) City City Taipei City Population 2,645,041 4,018,696 2,249,037 2,815,261 1,880,906 2,773,198 Taoyuan New City Taipei Population -0.6% 0.3% 1.7% 0.6% -0.1% -0.1% City Growth Rate Yilan Age Youth 13% Youth 12% Youth 15% Youth 14% Youth 12% Youth 12% Composition Adult 69% Adult 74% Adult 73% Adult 73% Adult 72% Adult 72% Aging 18% Aging 14% Aging 12% Aging 13% Aging 16% Aging 16% Taichung City Aging Index 134.4 118.9 81.4 90.4 130.1 134.5 (Aging/Youth) Chunghwa Nantou Hualien Industry Service 81% Service 65% Service 54% Service 57% Service 60% Service 51% Yulin Structure Industrial 34% Industrial 45% Industrial 40% Industrial 36% Industrial 42%

Disposable 1,389,305 1,069,349 1,129,990 1,065,509 898,912 1,003,178 Income (NTD)

Expenditure 1,012,450 820,520 901,666 865,525 717,367 793,253 Tainan City (NTD) Kaohsiung City Taitong Number of 179,653 133,847 61,029 101,419 38,290 81752 registered Pintong company 2019 Business 13.5 trillion 5.0 trillion 3.9 trillion 4.3 trillion 2.4 trillion 4.7 trillion sales (NTD)

Budget 167.0 billion 156.5 billion 104.3 billion 131.2 billion 80.1 billion 124.2 billion expenditure (NTD) Source: Google Maps.

Source: Executive . 1Wold Economic Forum, Global Competitiveness Report 2019. 2International Institute for Management Development, IMD World Competitiveness ranking 2019. 4 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

STRONG COMMERCIAL PROPERTY AND TAIPEI CITY: POLITICAL AND LAND INVESTMENT ECONOMIC CENTER Transactions in Taipei exceed NTD100 billion Financial and professional service, retail, and technology are main economic drivers In 2019 three factors supported an active investment market: abundant capital inflows, low interest rates and occupiers’ desire to purchase rather than lease. Most investments Taipei’s economy is mainly denominated by the services sector, were still located in the six metro areas. Taipei City, the capital and financial center of and over 80% of financial headquarters are in the city. Taipei is Taiwan, had the most active transaction market with a total value of NTD132.9 billion also traditionally the first step for foreign enterprises entering (USD9.0 billion). The office, commercial-zoned land, retail and hotel sectors were most Taiwan and Taipei has the most mature business districts and popular. Taichung City ranked second with total investments of land and commercial retail catchment areas. In addition to financial services, Neihu property at NTD75.1 billion (USD2.4 billion), with NTD65.3 billion (USD2.1 billion) Technology Park (NTP) and Nanagang Business Park (NBP) are contributed by land sales. Among the land sale, residential-zone land was the most two important technology clusters. popular target with total transacted value at NTD39.6 billion (USD1.2 billion), the highest residential land sales in Taiwan. Taipei hosts: Commercial property and land transactions, 2019, by city and property type (NTD billion) 6,305 companies registered with Other use land Industrial land Commercial land Residential land Other commercial Industrial property Office >NTD5 trillion annual production value

New Taipei City 196,000 employees Taipei City

Taoyuan City Xinyi : Business and entertainment hub Taipei’s development originated from the west, including Datong Taichung City and Wanhua districts. With saturation in that area, an aging built environment, and the expanding MRT network, development has Tainan City since extended east to Songshan, Daan, Jhongshan, and Xinyi districts. Now, Xinyi District is turning into the hub of political, Kaohsiung City commerce, retail and entertainment in Taipei, with the highest density of commercial development, 23 Grade A office buildings 0 10 20 30 40 50 and 15 department stores.

Source: Market Observation Post System; Colliers International Note: Other commercial includes hotel and retail sectors. 5 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

TAIPEI CITY 12 administrative districts in Taipei City NTP, NBP, and Beitou-Shilin Technology Park (BSTP) are new industrial clusters Beitou-Shilin Technology Park Taipei’s commercial developments now are centered in seven business > Land returned to owners in 2019 districts. However, with the limited land supply available, fringe areas such by government as NTP, NBP and BSTP are increasingly popular. In 2019, land transactions in > 25 hectares designed for commercial and industrial uses BSTP hit NTD10 billion (USD320 million), 19% of Taipei’s total. NPT is 25 Beitou years old and as lands in Wende and Xihu sections are nearly built-out, Shilin Jiuzong and Tanmei sections are becoming new headquarters destinations. The well-planned infrastructure and rezoning of idle industrial lands drove Neihu Technology Park > Increase the developable area NBP’s developments in recent years. In addition to Synnex’s purchase of Neihu office building at NTD6.4 billion (USD210 million) in Q3 2019, Colliers expects > Jiuzong and Tanmei sections 300,000 ping (990,000 sq meters) of office space to be released by 2026. As Jhongshan are included Taipei expands eastward, we expect Nangang to be the new hot spot. Datong Songshan Active commercial property transactions hit a record high Nangang Business Park Jhongjheng > Taipei’s eastern gateway with Taipei City has always been the top destination of investment in Taiwan, with Wanhua Daan Xinyi growing investment from the highest transaction value in 2019. Nangang public and private sectors > New industrial cluster Wenshan Source: Department of Urban Development, Taipei City; Colliers International The total sales value in 2019 reached Also, we see a NTD80.8 billion (USD2.6 billion), 54% YOY growth compared to contributing to 58% to Taiwan’s total. NTD52.4 billion (USD1.7 billion) in 2018. Sales value by sector in Taipei City (2019) Office Industrial Office Hotel Retail Factory

NTD26.5 NTD9.8 NTD5.4 NTD38.4 NTD800 billion billion billion billion million

Source: Market Observation Post System; Colliers International

6 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

NEW TAIPEI CITY: ACTIVE IMPLEMENTING INDUSTRY UPGRADES New Taipei City used to support Taipei City, Keelung port especially in the agriculture and manufacturing Taipei port sectors. Gradually, the industrial structure has Taoyuan transformed from entry level manufacturing International Airport such as food, textiles and plastics to electronics Wugu-New Taipei and computer components, telecommunications Industrial Park and semiconductors. Linkou I Linkou II Development has been mainly along the main national highways and express ways, with Wugu, Xinzhung Xizhi Tucheng, Shulin, Linkou, and Xizhi districts being the major industrial clusters. In addition to industrial focus and coupled with Shulin operation of MRT lines, commercial National Highway development have been gradually active. The Tucheng Xindian Expressway department stores used to center in Banqiao Provincial Road district, and we have seen the commercial activities extended out to Linkou and Xizhi Dingpu Source: Economic Development Department, New Taipei City; Colliers International districts. INDUSTRIAL PROPERTY DROVE TRANSACTIONS Active land transactions: Xinzhung, Wugu and In the past two years, became the most active destination for industrial offices as it is an extension of the technology corridor in of Nangang Tucheng districts District. Therefore, the concept of Big Xizhi Business Park has been formed, with The average transaction value of industrial land in the past five years was the new industrial focus on bio-technology, information, communication and NTD7.3 billion (USD240 million). The active transactions in 2019 pushed technology, cloud computing, and logistics. In 2018 and 2019, the total sales of the transaction value to NTD11.3 billion (USD370 million), a 55% growth industrial offices in Xizhi District stood at NTD2.7 billion (USD890 million). compared to the five-year average figure. We found Xinzhung, Wugu, and Implementation of industrial factory floor area bonus Tucheng are most active districts for industrial transactions. increases production value Xizhi District: a hot destination of industrial offices New Taipei City is an important industrial cluster in northern Taiwan. Now, the city government has approved 14 applications for floor area bonus projects, New Taipei City is a place mixed with factories and industrial offices, and including the high-end medical equipment and semiconductor industries, and the 2019 transacted value totaled NTD7.9 billion (USD260 million), located in Xinzhuang, Tucheng, Xizhi, Taishan and Shulin districts. An additional accounting for 68% of the city’s overall commercial property transactions. 5,596 ping (18,500 sq m) has been approved, which we estimate leads to an increase of 7,542 jobs and NTD45.7 billion (USD1.5 billion) production value.3 3https://udn.com/news/story/7323/4180074 7 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

TAOYUAN CITY: MANUFACTURING MAIN PURCHASE DRIVER: OWNER- HUB IN NORTHERN TAIWAN OCCUPATION A growing industrial cluster drove population US-China trade war drove the transaction of migration and commercial development industrial properties Taoyuan City is an important manufacturing hub in northern Taiwan, with a From 2017-2019, the US-China trade war in part pushed manufacturers to focus on logistics, photoelectric, electronics, aerospace, automotive parts, relocate parts of their operations back to Taiwan, and developers were also biological technology, and green energy. Also, the manufacturing sector is optimistic about the demand for industrial properties, further driving the the main economic engine in Taoyuan. The industrial clusters are mainly transaction of industrial properties (inclusive of land, industrial office, situated in Zhongli, Youshi, Pingzhen, Guishan, Dayuan, Guanyin, and factory and logistics). In Taiwan, the transacted value grew from NTD65.1 Longtan districts, forming a comprehensive supply chain along the National billion (USD2.1 billion) in 2017 to NTD99.1 billion (USD3.2 billion) in 2019, Highway. The manufacturing sector production value accounts for 17% of with Taoyuan City contributing 21% of the total. Notable examples of factory Taiwan’s total, at NTD2.9 trillion (USD92.6 billion) annually. With well- expansion, especially in electronic manufacturing sector in 2019, included planned infrastructure, the expansion of industries and social welfare Quanta, , Inventec, and Tongxin Electronics. policies, we saw a significant population migration. Since 2015, population increased by 30,000 annually, ranking the highest among the six metros in The proximity to airport make Taoyuan the top Taiwan. destination for logistics companies E-commerce sales have been growing fast, with an annual growth rate of 8% High-speed Railway Special Zone in Qingpu since 2001, reaching NTD208 billion (USD6.7 billion) in 2019. This further Public infrastructure has been drove logistics demand by retailers and e-commerce platforms. Investors concentrated in the High- such as REITs and insurance companies are also players in the logistics speed Railway Special Zone. In market. The nationwide transaction value of logistics in 2019 totaled addition to the operation of NTD10.3 billion (USD330 million), with Taoyuan City contributing NT6.8 high-speed rail, Taoyuan billion (USD220 million). Airport MRT, and the Cathay Project Landmark Project (inclusive of Major logistics deals in Taoyuan City, 2019 , Yokohama IKEA Value Subject Property Buyer Size (ping) Date Hakkeijima Aquarium, Shin Taoyuan Station/ (NTD billion) Kong Cinema, and Cozzi Hotel), HSR Taoyuan Station Plaza Hengstyle logistics Nanshan Life 3,950 0.74 2019 Q2 the Global Mall and IKEA are Guanyin Logistics Millerful REIT 18,140 2.5 2019 Q3 also under construction. Also, Tungwei coupled with an exhibition Dynamic Factory 5,830 0.74 2019 Q4 Global Construction center and art museum, we Mall/Exhibition Hall expect this neighborhood will INFOMEDIA Factory Transglobe 13,400 2.8 2019 Q4 be the new commercial Subtotal --- 41,300 6.8 --- landmark in Taoyuan City. Source: Google Maps Source: Market Observation Post System; Colliers International

8 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

TAICHUNG CITY: GATEWAY TO STRONG INVESTMENT AND CENTRAL TAIWAN DEVELOPMENT MOMENTUM Population growth, manufacturing operations, and Main driver of land transactions: public land sales accessibility are main drivers Mainly thanks to developers’ purchases, Taiwanese enterprises’ relocating their manufacturing operations from China, and government land sales, the Taichung City is a transportation node in central Taiwan, and the regional land transaction volume in 2019 was NTD65.3 billion (USD2.1 billion), the economic and business center. The city government is promoting and highest in Taiwan. Compared to the annual average transaction value from updating industries, and 19.3% of the city’s economic development budget is 2011 to 2018 of NTD24 billion (USD780 million), 2019’s figure was 2.7 times allocated to support this transformation. The growth of manufacturing the average. Supported by population growth and the future operation of operations and infrastructure attract population migration, in part, making MRT green line 2020, residential-zoned land accounted for a large Taichung City the second largest city by population. The industrial cluster proportion of land transactions, especially in and North originates from Dadu Mountain, linking industries of machine tool, integrated district. In addition, the newly-developed government-planned Taiping and circuit, precision machinery, photoelectric, motor vehicle, and aerospace Nantun districts are hot destinations. In 2019, the transaction value of sectors. Among these, the export volume of machine tools ranks the fourth in residential-zoned land totaled NTD39.6 billion (USD1.3 billion), contributing 4 the world. In addition to Taipei City, Taichung City is another metro which has 61% to Taichung’s total. office clusters, namely City-hall, Taiwan Blvd., and Wenxin Rd. districts. We saw active leasing transactions in City-hall district, which is an area focused on Increased demand for office and industrial properties Grade A offices. The vacancy rate decrease from 46% in Q2 2018 to 17% in Q4 2019, a double-digit drop within one year. The average rent of Grade A offices The transaction value of commercial properties in 2019 totaled NTD9.8 stood at NTD1,050 per ping (USD10 per sq meter) per month. billion (USD320 billion), hitting the record high during 2014 to 2019. Owner- Chungkang Export Processing Zone occupied factories dominated transactions, accounting for 78% of the total, Dajia Youth Industrial Park Taichung Harbor or NTD7.4billion (USD244 million). Buyers are mainly owner-occupied Industrial Park manufacturers, such as optoelectronics, integrated circuits, electronic Dajia components, communication and networks, and automotive industries. Central Taiwan Fengxing Houli Industrial Park Science Park Houl Central Taiwan Science Park (Houli) Taichung City, land transactions, 2011-2019 (NTD billion) Shengang Fengzhou Industrial Park (Phase I and II) Wuqi Daya Shengang Jixin Industrial Park 80 Tanzi 64 Taichung Industrial Park Xitun Taichung Export Processing Zone City-hall Beitun North 60 Dadu Mountain Nantun Tazi Juxing Industrial Park 38 Taiping 40 34 34 Taichung Precision Dali 24 29 Machinery Innovation Dali Industrial Park 18 23 20 Tech Park (Phase I and II) Wuteng Yonglong Industrial Park 20 Taichung High Speed Rail Station, Wuri Dist. Taiping Industrial Park Wufeng Industrial Park Renhua Industrial Park 0 Taichung Software Park 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Economic Development Bureau, Taichung City; Colliers International 4https://www.invest-taichung.com.tw/investment-environment/industrial-settlement/ Source: Market Observation Post System; Colliers International

9 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

TAINAN CITY: THE OLDEST CITY IN TAIWAN, FULL OF CULTURAL HERITAGE Tainan City, the oldest city on the island, is the birthplace of Taiwan. The city is known for its abundant historical and cultural resources. In Tainan, there are 142 certified historical sites, second to Taipei City’s 171 sites. Among these, there are 22 national-certified heritage sites, ranking the highest in Taiwan. These include the Confucius Temple, Anping Castle, Chikan Tower, and Eternal Golden Fortress. These attractions have a history of over 100 years, becoming the main driver of Tainan’s hospitality market. Beyond the increasing number of visitors and rich leisure resources, supported by the city’s tourism promotion, we have seen international developers and operators locate in Tainan City. For example, Mitsui Outlet Park in Tainan High Speed Railway Special Zone is scheduled to open in 2020, and Banyan Tree Group introduced the Angsana Hotel, a family resort, in Anping Harbor. INTEGRATION OF TYPICAL Five major industrial sectors in Tainan City MANUFACTURING AND HIGH VALUE-ADDED INDUSTRIES

In addition to the cultural attractions, Tainan City has a solid base of textiles, Metal Machinery Plastic Automobiles Food automobiles and components, food, and plastic products manufacturing. manufacturing products and components Among them, with a well-developed automotive supply chain, about 20% of Taiwan’s automobile component manufacturers are located here. Currently, Houbi Southern Science Park has an annual sales value of NTD69.5 billion (USD2.2 Baihe Beimen Ysdo Xinying billion)5 generated from high value-added industries including optoelectronics, integrated circuits, precision machinery, biotechnology, Syuejia Liuying communications, computers, and peripheral equipment. In order to expand Jiangjun Xiaying Dongshan the industrial development in Tainan, the government has designed Madou Lioujia Jiali Guantian different clusters in Yongkang and Liuying for further expansion. Cigu Sigang Shanhua Nansi Growth industries drive the demand for land Anding Danie Yujing Annan Sinshih Shanshang Transactions active for commercial zoned land Nanhua Due to Tainan’s industrial structure, there are fewer investment Yongkang Sinhua Zuojhen opportunities for retail and offices. Growth industries drove the demand for land over the last two years. In 2018, the land transaction value was South NTD12.8 billion (USD410 million), a significant growth from the year before Rende Gueiren Longci 2017, which was NTD6 billion (USD200 million). The momentum continued in 2019, with land transactions reaching NTD29.8 billion (USD980 million), 69% coming from government land sales. We also found that NTD14.7

billion (USD470 million) of sales was for commercial-zoned land, higher than Source: http://invest.tainan.gov.tw/ the sum of the past five years. 5https://wsts.most.gov.tw/STSWeb/sciencepark/ScienceParkReport.aspx?language=C&quyid=tqindustry04 10 COLLIERS RADAR COMMERCIAL PROPERTY | RESEARCH | TAIPEI | 8 APRIL 2020

KAOHSIUNG CITY: TRANSFORMING TO BE A COASTAL LEISURE CITY Kaohsiung City is the largest harbor city in Taiwan by port area, as well as the and port terminal are under construction. The tourism industry is improving, hub of heavy industries. The current industrial clusters are along national with visitor arrivals at 344.2 million in 2019, a 4% YOY increased compared highways No.1 and No.3, which can be divided into three submarkets: to 2018. . SK is Taiwan’s hub of steel and petrochemicals, and with the Northern Kaohsiung (NK), Central Kaohsiung (CK), and Southern Kaohsiung operation of Kaohsiung harbor, this area also has logistics and shipping (SK). industries. Kaohsiung City is the hub of heavy industry in Taiwan. Industrial Commercial developments are seeing increased activity due to the increased development in NK focuses on metals, optoelectronic semiconductors, visitor arrivals since 2016. In NK, the , a lifestyle center, was already aerospace and biotechnology medical equipment. In CK, the main products in operation, and Eskyland, a mixed-use development with a Marriot hotel are metal equipment and processing, home appliances and the auto & and high-end , and a life-style mall are under construction. The motorcycle industries. In CK, the creative industries and digital media are at Sando catchment area and the ANBA are two commercial focuses in CK, and an early stage of development In recent years, the city government heavily potential commercial developments include Far Eastern Department Store invested in public projects, transforming the city from a purely industrial city phase two and those lands located in the ANBA. We expect a large supply of to a seaside city, and initiated the Asian New Bay Area (ANBA) plan to commercial developments will be constructed by both the public and private develop coastal leisure industries. Software business parks, the city library sectors, with the main challenging being how to position each as a unique and convention center, and light rail are in operation; a pop music center and attractive project.

> Luzhu, Gangshan, and extending to RISING COMMERCIAL POTENTIAL Qiaotou disricts > Focus on metals, optoelectronic DROVE LAND TRANSACTIONS semiconductors, aerospace, and biotechnology medical equipment There are fewer commercial property transactions in Kaohsiung compared to northern Taiwan due to its industrial structure. From 2015 to 2019, the > Mixed manufacturing clusters and commercial transaction value was only NTD33.8 billion (USD1.1 billion). newly-developed industries such as Notable transactions include Taiwan Life Insurance’s 2016 purchase of a hotel creative industry and digital media and shopping mall for NTD16.5 billion (USD510 million), and HPW group buying > Mature commercial developments Hotel at NTD5.4 billion (USD170 million) in 2019. with Sando catchment area > Increasing public investment in 2019 land transactions were lower by 15% YOY at NTD27.6 billion (USD890 infrastructure million), compared to 2018’s NTD32.4 billion (USD1.1 billion), which was the second highest since 2016. Commercial land transactions accounted for 49% of > Focus on logistics, processing, and Kaohsiung’s total real estate transactions. Two large transactions include Fubon shipping related manufacturing Life Insurance’s 2018, NTD7.8 (USD260 million) purchase of commercial land > The hub of steel and adjacent to NK for development of a mixed-use hotel and office project petrochemicals scheduled to be completed in 2022. In addition, Fenglu Construction Crop. bought commercial land in the ANBA for NTD2.9 billion (USD957 million) in Source: Economic Development Bureau, Kaohsiung City; 2019, which is scheduled to have hotel and high-end residential components. Colliers International

11 Primary Author: For further information, please contact:

Eilleen Liang Andrew Liu Director | Research | Taiwan Managing Director | Taiwan +886 8722 8601 +886 2 8722 8600 [email protected] [email protected]

Amanda Yang Contributor: Senior Executive Director | Office Services & Industrial Services | Taiwan +886 2 8722 8600 Andrew Haskins [email protected] Executive Director | Research | Asia +852 2822 0511 Derek Huang [email protected] Executive Director | Capital Market & Investment Services | Taiwan +886 2 8722 8600 [email protected]

Carrie Chan Senior Director | Valuation & Advisory Services | Taiwan +886 2 8722 8600 [email protected]

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