Property Times Taipei Q2 2012 Figure 4 Retail Sales of general merchandise (2001 – 2012*) Retail sales from January to May reached NT$416.93 NT$ million billion (US$14.13bn), a y-o-y increase of 6.09% (Figure 1,200,000 4). Sales in convenience stores showed the biggest increase, 12.23% y-o-y. Supermarkets and department 1,000,000 stores also saw 5.50% and 5.47% y-o-y growth 800,000 respectively (Figure 4). Thanks to the FITs, the number of mainland visitors 600,000 reached 1.78 million people in 2011, a y-o-y increase 400,000 of 9.20%. The average expenditure for travellers was US$270 per person per day, a y-o-y increase of 200,000 10.20%. Shopping expenditure among group travellers - was US$164, a y-o-y increase of 15.50%. 2005 2006 2007 2008 2009 2010 2011 2012* The vacancy rate in major retail districts remained * Data as of May 2012 Source: Department of Statistics, Ministry of Economic Affairs. stable, except for the Taipei Railway Station area, which fell 2.20 percentage points q-o-q (Table 3). Table 3 Meanwhile, rents in the Zhongshan/Nanjing area rose Retail market statistics steadily with strong domestic demand. Availability Rental range District Far Eastern Big City Shopping Mall was launched on ratio (%) (NT$/ping/month) 28 April in Hsinchu City, with an operations area of Zhongxiao 3.74 18,000~27,000 54,000 ping. Sogo Department Store, A.Mart and Big City Mall were introduced to the project (Table 4). Taipei Railway Station 4.41 10,000~16,000 Dachan Great Wall Group is going to take over the T2 Zhongshan/ Nanjing 0.76 8,000~10,000 retail area in Taiwan Taoyuan International Airport, Ximen 3.19 9,000~16,000 with an operating area of 500 ping. It is planning to provide F&B service with a profile target of 0.24 billion Tienmu 8.76 2,800~4,600 (Table 5). Note: Only street front shops are being taken into account. All data is based on gross floor area unless otherwise specified. Rent exclusive of management fees and other outgoings. 1 ping = 35.58 sq ft = 3.3 sq m Source: DTZ Research Recent transactions Table 4 Shanyuan Group spent NT$1.5bn (US$50.84 million) Major new supply in Q2 for 4,628 ping of retail floor area in Neo Sky Dome in Expected Banqiao District. District Project Name GFA (ping) Completion Uniqlo opened its twelfth store in Ximen Galaxy Date Commercial Building, with an operating area of 1,237 Hsinchu Big City Shopping 54,000 Q2 2012 ping. City Mall Zara opened its third store on the first and second floor Source: DTZ Research of Q-square mall, with an operating area of 400 pings. The Ice Monster opened a 56 ping shop in Sec. 4, Table 5 Major new supply in the future Zhongxiao East Road with rental of 450,000 per month. Expected GFA Cyber 3C+ opened a 1,000 ping shop in Taoyuan City District Project Name Completion (ping) and a 100 ping shop on Xingfu Road, Xinzhuang Date District. Ruentex Songshan Songshan railway station BOT 3,000 Q4 2012 project www.dtz.com 4 Property Times Taipei Q2 2012 Table 6 Investment Total number of major deals This quarter, both the total number and the total Q2 2011 Q1 2012 Q2 2012 consideration of major investment deals increased q-o- q. In total, 18 major deals were recorded and the Office 8 1 4 amount rose sharply to NT$27bn (US$914mn). Retail 6 3 5 Significant transactions were mainly industrial offices, which accounted for 38.9% of total volume (Table 6 I/O 4 5 2 and 7). Industrial 4 3 5 This quarter, long-term investors seeking a stable Hotel 1 0 2 return became more active. Taiwan Life Insurance acquired Imperial Hotel for NT$4.6bn (US$156m) and Others 0 0 0 leased it back to Imperial Hotel. Total 23 12 18 Thanks to improved investment confidence, Fubon Life Source: DTZ Research Insurance purchased Changhong Triumph Building in NHTP for NT$7.09bn (US$240m), the highest Table 7 transaction amount in the area since 2010. Total consideration of major deals (NT$mn) Fubon Life Insurance publicly tendered Pacific Dunnan Q2 2011 Q1 2012 Q2 2012 commercial building, with 992.6 ping of floor area, on Section 4, Zhongxiao East Road for NT$1.939bn Office 7,861 223 1,494 (US$66mn), with the first floor at NT$9.29m Retail 9,392 1,935 6,314 (US$314,900) per ping. I/O 4,883 2,690 10,490 Cathay Life Insurance acquired Auto21’s factory in Tucheng in the foreclosure market for NT$4.39bn Industrial 1,972 1,533 2,238 (US$149mn). This property, with 12,000 pings of land Hotel 478 0 6,460 area and 10,500 pings of building area, will be self- occupied as storage space. Others 0 0 0 After Wei Chuan Corporation acquired industrial land Total 24,586 6,381 26,996 in Sanchong for NT$642,400 (US$21,800) per ping in Source: DTZ Research the foreclosure market in 2010, Kindom Construction Company purchased 3,580 ping of nearby industrial land for NT$832,400 (US$28,200) per ping. It shows that developers had a positive attitude toward industrial land with potential for development and rezoning to residential use due to the completion of the MRT system. Table 8 Significant deals Price Property Sector Purchaser Location (NT$mn) Imperial Hotel Hotel Taiwan Life Insurance Zhongshan District, Taipei City 4,600 Changhong Triumph Building I/O Fubon Life Insurance Neihu District, Taipei City 7,090 Pacific Dunnan Commercial 1,939 Retail Fubon Life Insurance Daan District, Taipei City Building Newa Building Retail Cathay Life Insurance Zhongshan District, Taipei City 1,500 Holiday Inn East Taipei Hotel Haewan Tech Shenkeng District New Taipei City 1,860 Source: DTZ Research www.dtz.com 6 .