R ESEARCH TAIWAN INVESTMENT IN TAWIAN, OFFICE AND RESIDENTIAL MARKETS IN TAIPEI CITY Q1 2017 COMMERCIAL OFFICE MARKET NEIHU RESIDENTIAL REAL ESTATE IN TAIPEI CITY TECHNOLOGY MARKET IN INVESTMENT PARK TAIPEI CITY ECONOMY KEY FINDINGS The Directorate General of Budget, increased by 58.41% year on year. Taiwan’s economy has Accounting and Statistics of Executive In terms of residential sales remained stable for nine Yuan estimated Taiwan’s GDP growth transactions, the number of buildings months as of March 2017. in 2017 to reach 1.92% (table 1). transferred was 59.7 thousand, up Outlook for export was optimistic. 35.29% year on year (table 1). This The Central Bank of Taiwan Meanwhile, the National Development was a lower base period resulted from announced that the discount Council announced that the domestic the implementation of Integrated rate, the secured financing economy has remained stable for nine Housing and Land Tax last year. interest rate and the short-term months as of March 2017 (table 2). interest rate remained Regarding mortgage balance, Airport Considering the uncertainties in the unchanged at 1.375%, 1.75% MRT’s operation brought about the US and Europe’s economic policies, and 3.625% respectively. buying sentiment along the MRT route. and the support to the recovery of Room for negotiation went up and domestic economy, the Central Bank Foreign capital engaged mainly some projects were completed and of Taiwan announced in March that an in M&A activities, and no foreign ready for handover. As a result, easing monetary policy would be direct investment activities were residential mortgage balance reached adopted and that the discount rate, the recorded. a high of NT$6.4 trillion, up NT$18.24 secured financing interest rate and the billion month on month, while the short-term interest rate remained Residential sales transactions construction mortgage balance stood unchanged at 1.375%, 1.75% and went up by 35.29% year on at NT$1.66 trillion, up NT$7.41 billion. 3.625% respectively. year. Stable demand from In Q1, 6,875 applications for “first-time first-time buyers and self-users In terms of the currency exchange rate, home buyer’s mortgage” were was observed. New Taiwan Dollar saw strong recorded. The amount equaled performance in Q1. The US Dollar NT$33.59 billion, up 0.28% year on weakened, and the rate difference year. This showed modest growth in between Taiwan dollar and the US first-time home buyers. dollar was stable. Domestic economy In Q1, 6.75 million square meters of saw modest growth in Q1. All of these construction permits were issued resulted in a surge of capital, which (table 1), up 9.98% year on year. allowed for New Taiwan Dollar’s Among cities in Taiwan, Tainan saw drastic appreciation. the largest increase - 41% was According to the Investment recorded. This was believed to be the Commission, the number of foreign construction investments that were investments reached 748, up 1.77% fueled by developers and social year on year. The investments housing. amounted NT$3.31 billion, down 12.99% year on year - large investment projects were recorded and thus the base period was larger. Meanwhile, 38 mainland investments were approved in Taiwan in Q1 2017, down 7.32% year on year. Mainland investments totaled NT$1.63 billion. With a shakeup in shareholding structure, Dutch company Nexperia was turned into a mainland investment, and thus mainland investment volume 2 TAIWAN REAL ESTATE MARKET REPORT Q1 2017 RESEARCH ECONOMIC INDICATORS TABLE 1 Latest Economic Indicators Indicators 2017 2016 2015 2014 1.92% GDP Growth 1.40% 2.32% 3.74% (forecast) Unemployment 3.78% (Mar) 3.79% 3.78% 3.79% Annual Change of 0.18% (Mar) 1.70% 0.14% 0.60% CPI Construction 6.75 Permits Issued 26.24 32.60 38.63 (million m2) (Jan to Mar) Number of 59.7 Buildings 245.4 292.6 320.6 Transferred (Jan to Mar) (thousand) Taiwan Stock 9,811.52 9,253.50 8,363.28 9,307.26 Exchange Weighted Index (31 Mar) (30 Dec) (25 Dec) (31 Dec) Exchange Rate $30.34 $32.27(30 Dec) $33.07 (31 Dec) $31.72 (31 Dec) (US$1=) (31 Mar) Source: DGBAS of the Executive Yuan, Construction and Planning of the Ministry of the Interior and Central Bank of the Republic of China (Taiwan) TABLE 2 Monitoring Indicators Mar 2017 Dec 2016 Sept 2016 Jun 2016 Monitoring Scores 24 28 23 20 Remarks: Scores 9-16 – sluggish; 17-22 – transitional; 23-31 – stable; 32-37 – transitional; and 38-45 – booming Source: National Development Council 3 COMMERCIAL REAL KEY FINDINGS ESTATE In Q1 2017, major commercial In Q1 2017, major commercial real estate NT$27.2 billion (table 4), and industrial real estate transactions were TRANSACTIONStransactions was NT$12.5 billion, up 56% land transaction topped the list. The land NT$12.5 billion, up 56% (NT$8 (NT$8 billion in Q1 2016 (table 3). The acquired was mainly used to build up billion in Q1 2016). amount, however, was still lower than factories/offices for self-use. NT$14 billion, the average of Q1 over the In Q1 2017, developers proactively past few years. The amount in Q1 2017 sought land, and thus there were Transactions of factories and was not a positive note. industrial offices accounted for residential land transactions across the more than 70% of the Types of property transacted in Q1 2017 island. Residential land transaction transactions. Residential land included factories (40%), industrial offices accounted for 32% of total transaction. transactions gradually picked (33%), retail (22%), and offices (4%). The transaction with highest unit price up – nearly 30% was recorded in Commercial properties were mainly was the land parcels located at Taipei City. purchased for self-use, and industrial Subsection 3, Changchun Section, properties were the main type transacted. Zhongshan District, Taipei City – Cathay Life acquired this Type III Commercial Micron Memory Taiwan won a tender bid land from Rich Development for of Dahong’s factories in Taichung for NT$2.327 billion. The land parcels were NT$2.748 billion. This was the reason for 1,014 sq m, and the unit value was factories to top the list of types of NT$14 thousand per sq m. A commercial properties transacted, and this was the building with 18 aboveground levels and first commercial transactions completed 4 basement levels was planned (table 6). by foreign investment this year. Industrial offices ranked the second. CyberPower acquired Price HQ Building located at Neihu for NT$2.6 billion. The unit value was about NT$142 thousand per sq m (table 5). In Q1, land transaction was about TABLE 3 Value of Major Commercial Real Estate Sales Transactions (NT$ billion) 2017 2016 2015 Q1 12.5 8 12.6 Q2 _ 31.9 9.6 Q3 _ 17.1 9.7 Q4 _ 13.1 79.6 Total 12.5 70.1 111.5 Source: Market Observation Post System, complied by Research Dept, REPro Knight Frank TABLE 4 Value of Major Land Sales Transactions (NT$ billion) 2017 2016 2015 Q1 27.2 13.0 34.1 Q2 _ 13.7 41.9 Q3 _ 18.8 39.3 Q4 _ 29.4 17.8 Total 27.2 74.8 133.2 Source: Market Observation Post System, complied by Research Dept, REPro Knight Frank 4 TAIWAN REAL ESTATE MARKET REPORT Q1 2017 RESEARCH Commercial商用不動產買賣 Real Estate Sales Transactions TABLE 5 Major Commercial Real Estate Sales Transactions Total Total Subject Unit Value Month Date City District Buyer Seller Value Building Area Remarks Property (NT$10 thousand/m2) (NT$ billion) (m2) Xining Edora Park Taipei Unit value for the first floor Jan 3 Wanhua Commercial Department HH Leasing 2.2 3,923 181.54 City shop Building Store Prince Taipei Prince HQ Feb 21 Neihu Cyberpower Housing & 2.6 21,512 14.25 Excluded parking space(s). City Building Development Hsinchu Darwin Tera Xtal Movable properties Mar 2 Hukou (A factory) 0.915 20,217 4.53 County Precisions Techonlogy included. Acquired through Taichung Micron Mar 14 Houli (A factory) Dahong 2.752 68,509 3.63 foreclosure. Movable City Memory properties included. Taichung Fair Friend Mar 17 Xitun (A factory) Bairong 0.677 8,921 7.59 _ City Group Source: Market Observation Post System, complied by Research Dept, REPro Knight Frank Land Sales Transactions TABLE 6 Major Land Sales Transactions Total Unit Value Zoning Subject Land Area Month Date City District Buyer Seller Value (NT$10 Remarks Property (m2) (NT$ billion) thousand/m2) Yucheng Ruixin Ruentex Commercial Jan 07 Taipei City Nangang Section, Development 3.5 5,285 66.23 _ Development -specific Subsection 2 (Goldsun) Ministry of Kaohsiung Guomao Highwealth Type IV Jan 10 Zuoying National 0.995 10,050 9.90 _ City Section Construction Residential Denense Taichung Changping Cathay Real Type III Jan 25 Beitun (An individual) 1.025 3,811 26.90 _ City Section Estate Residential National Yucheng (An individual) Acquired Property Type III Feb 09 Taipei City Nangang Section, (Hsin-Han 1.858 6,395 29.05 through Administration, Industrial Subsection 1 Development) foreclosure (An individual) New Taipei Yongcui Type II Feb 16 Banqiao Sinyi Realty (An individual) 1.066 3,041 35.10 _ City Section Residential Kaohsiung Xizhou CPC Industrial-sp Related-party Feb _ Linyuan Capco 3.700 310,181 1.20 City Section Corporation ecific transaction Changchun Rich Type III Mar 08 Taipei City Zhongshan Section, Cathay Life 2.327 1,015 229.31 _ Development Commercial Subsection 3 Formosa Pingtung Xinfang Dacheng Mar 17 Xinyuan Chemicals & 1.022 168,829 0.61 Industrial _ County Section Plastics Fibre Changhua Taichung Zhennan Farglory Type IV Won a tender Mar 21 Wuqi County 1.320 22,415 5.89 City Section Development Commercial bid Government Tanmei Taichung Farglory Mar 30 Neihu Section, (An individual) 0.826 1,728 47.81 Residential City Development Subsection 5 Source: Market Observation Post System, complied by Research Dept, REPro Knight Frank 5 OFFICE MARKET IN KEY FINDINGS TAIPEI CITY NT$517 per sq m per month, down 1.16% Vacancy rate of Grade-A offices Leasing Market quarter on quarter (table 7).