The quarterly report indicates that Taipei's total stock remained unchanged for the eighth consecutive quarter. Taipei office market is likely to follow an upward trend on the back of keen demand for quality office space.
Investment Market - Quality office will continue to attract institutional investors
Taipei's property investment market was fairly active in the third quarter of 2007, with activity concentrated in the Neihu Technology Park. The combined value of the quarter's investment sales in the Park amounted to approximately NT$8 billion. Shin Kong Life Insurance purchased two buildings from BenQ as well as an under-construction building from Huaku Construction Co., Ltd for NT$6.54 billion in July.
The robust demand for properties within the Park has showed investor's buoyant confidence in the prospects of the area. Currently viewed as a decentralized area, Neihu is likely to become a significant office submarket in Taipei as the City Government is formulating the plan of Grater Neihu, which will add another 175 hectares of land to the existing Neihu Technology Park.
In the third quarter of 2007, Nanshan Life Insurance, a subsidiary of AIG, bought several floors and parking space of Chong Sheng Building from Yuanta Financial Holdings for roughly NT$3.43 billion. Another notable transaction was the purchase of Meifu Building along Jiang Guo North Road by CITADALE, a private fund from Singapore, for NT$5.2 billion. The building purchased from Mei Fu Construction Co., Ltd is under construction and slated to join the market in 2008.
As the Taipei office market has been following an upward trend, it is expected that institutional investors will keep close eyes on quality space with good location and that the foreign/local insurance and investment companies will continue to dominate the property market for some time to come.
Leasing Market - Office occupiers are drawn by quality buildings under construction
The third quarter saw the total stock of office space remain the same for the eighth consecutive quarter as no new supply was introduced this year in Taipei's CBDs except the Yuanta Core Pacific Securities Headquarters reserved for self-use.
The next prominent office space coming on stream is the Meifu Building, which is scheduled for completion in the first quarter of 2008. The structure, however, will have limited effects on the office leasing market for most of the total area being pre-committed by AEGON Life Insurance under a 15-year contract.
After experiencing market stagnation with respect to space take-up in the second quarter of 2007, the Taipei office market witnessed an increase of approximately 200% q-o-q in net take-up, reflecting a total of 8,762 ping occupied in the period under review. In accordance with the trend of relocating for upgrade reasons, Grade A office market contributed nearly 5,000 ping to the buoyant take-up this quarter.
The largest leasing transactions in terms of area included Hontai Life Insurance's 2,128-ping relocation to Hung Tai Century Building located in the Minsheng-Dunhua Area, Bank of America's occupancy of 1,414 ping in Taipei 101 in Xinyi-Jilong Area and 1,341 ping of take-up in the President International Building by AIG General Insurance, which also resides in XJA. The robust demand for Taipei's office space had consequently compressed overall vacancy rate to 8.13% at the end of the third quarter.
