2Q23 Taipei Commercial Real Estate Market Report
Rent continues growing; however, the momentum is slowing; vacancy rate remains at 2.7%, indicating the demand is stable
- Josh Hsu
2023 Q1 Office Leasing Market Summary:
In the second quarter of 2023, the average rent for Grade A office increased by 1.3% compared to the same period last year, reaching NT$2,985 per ping per month. Due to uncertainties, the decision-making plan of corporates for leasing becomes conservative, however, the positive Y-o-Y of 1.3% indicates a long-term positive trend and the demand remains stable.
Under the trend of net-zero carbon emissions, companies’ demand to achieve ESG standards is increasing day by day. A green leasing survey was conducted on the office market in Xinyi District, which has the highest density of A-offices. Currently, more than 65% of the floor area of grade A offices have green certifications. Among them, six commercial buildings have at least two different green building certifications at the same time. In addition, purchasing green electricity has become the direction for enterprises to pursue carbon reduction.
The leasing market is in a consolidation stage
Trend of Green Leasing: both green building certification and green electricity are indispensable elements of green leasing
Whether the upcoming supply can satisfy the tenants’ expectations for hardware and software facilities and ESG requirements would be crucial to the absorption of new supply
Investment Market Summary:
CRE transaction volume surged up in 2Q23, which is a new high for Q2 transaction volume in the recent 10 years
Land transaction volume has recovered in 2Q23, with investment volumes reaching NT$27.5 billion, a 47% increase from 1Q23, indicating that the confidence in Taiwan’s land market rebounded in 2Q23
In 2Q23, the investment volumes in CRE reached NT$47 billion, an increase of 267% Q-o-Q and 161% Y-o-Y.
In 1H23, the total transaction volumes reached NT$59.8 billion, exceeding the total transaction volumes in 1H22.
Industrial real estate is also well-performed, indicating that the expansion demand of the technology industry has not yet been met.
Land investment rebounded in 2Q23, with investment reaching NT$27.5 billion, a 47% increase from 1Q23. Despite a 22% Y-o-Y decline, it is a significant improvement from the 66% decline seen in 1Q23. It also shows that the market is stabilizing and confidence in Taiwan’s land market is returning
Despite the challenging economy, purchasers are still interested in high-quality properties
Long-term confidence of Taiwan’s capital market is optimistic
Demand of industrial real estate is still solid