As a result of limited supply and a fall in vacancy rates, the cost of renting offices in Taipei is expected to grow for the next three years, according to multinational property market advisory firm Collier.
In 2019, average office rent in Taipei, the most closely watched property market in Taiwan, rose 2.05 percent from a year earlier to around NT$1,906 (US$63.53) per ping per month (one ping equals 3.3 square meters) as the vacancy rate fell, data compiled by Collier showed.
Market analysts said the increased rent for office space is an indication of rising demand at a time when a greater number of Taiwanese investors with operations overseas, in particular in China, are investing more at home to avoid the impact of additional tariffs imposed by the United States on goods made in China.
The data indicates that rent of premium offices in Taipei rose 5.10 percent this year, with Xinyi District, the most prominent business district in the capital seeing rent of top-grade office space rise 5.53 percent, the highest growth in Taipei. The average rent for office space in Xinyi District stood at NT$2,405 per ping per month, about 17-35 percent higher than in other business districts in Taipei, Collier said.
The vacancy rate for premium grade office space in Taipei dropped sharply from 11.50 percent in the fourth quarter of 2018 to 3.20 percent in the fourth quarter of last year.
The data also shows that although the vacancy rate for Grade A and Grade B office space in Taipei remained at around 7.44 percent in the fourth quarter of last year, the vacancy rate for other grades of office space fell to less than 4 percent.
Collier said in addition to limited supply, the office rental market in Taiwan is expected to consume 23,000-30,000 ping in space in the rental market in 2020, pushing the vacancy rate lower. That will likely boost rent and the momentum is expected to continue into 2021 and 2022.
In Neihu Science Park in Neihu District, the busiest industrial zone in Taipei, after strong demand in the rental market, fewer than 30,000 ping in office space was available with a vacancy rate of 3.42 percent and average rent at about NT$1,200 per ping per month in the second half of 2019.
In terms of commercial property, including land, office, and factories, transactions totaled NT$410.5 billion in 2019, up 54 percent from a year earlier, Collier said. Land sales to property developers hit 300,000 ping in 2019, equivalent to the size of almost four Daan Parks in Taipei, it added.
Excluding land, sales of commercial property in 2019 totaled NT$138.6 billion, up more than 70 percent from a year earlier with sales of industrial property including factories and offices inside factories accounting for NT$55.6 billion, about 40 percent of the total, as many Taiwanese firms plan to invest.