Taiwan Real Estate Report Q3 2012
Business Monitor International, May 2012, Pages: 60
The Taiwan Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Taiwan's Real Estate industry.
The Taiwan Real Estate report examines the Commercial Office, Retail and Industrial segments throughout the state in the context of the country´s exported economy, which is particularly susceptible to global economic dynamics. With a focus on the principal city of Taipei, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the growing Chinese interest in a relatively stagnant market. After slipping into a technical recession in Q411, we believe that Taiwan’s economy is set to face further struggles, stemming primarily from a deterioration in the hightech sector, we expect exports and investment weakness to be the main drags on growth. This, in turn, has the potential to depress the performance in both the industrial and office sub-sectors of the commercial real estate markets, and any longer-term slowdown would adversely affect private consumption and thus the outlook for the retail sector.
Nevertheless, our latest data collection show that an economic slowdown has not yet had a tangible effect on the real estate market, with only prime retail rents noting any form of year-on-year (y-o-y) contraction.
In the short term, we anticipate a steady growth in rental rates across the market, and we will be watching the H112 data carefully for any further signs of a slowdown in the market.
Key Points
- Stronger economic ties between Taiwan and mainland China are boosting the Taiwan commercial property market
- Political stability derived from the re-election of incumbent president Ma Ying-jeou and the victory of the Kuomintang (KMT) in the legislative elections provides opportunities in the business environment: for example, Germany’s Volkswagen (VW) is reportedly reconsidering its abandoned plans to produce cars in Taiwan
- Our forecast for real GDP growth in 2012 has been revised downwards from 3.4% to 2.4% as we expect net exports and decline in investments pose a drag on the economy.
- We believe that construction activity in Taiwan could remain relatively lacklustre in 2012 and have revised down our construction forecasts for 2012 and 2013, from 5.5% and 8.1% to 4.4% and 7.3% respectively. This pessimistic outlook is primarily due to Taiwan's sizeable trade exposure to China and Europe, as both countries are expected to see a significant slowdown in economic development. However, over the medium term, we expect Taiwan's construction sector to grow at a relatively robust pace as the victory by the previous incumbent, the KMT, is likely to lead to a continuation of infrastructure projects that facilitate greater economic integration with China, as well as greater non-residential investment from Chinese companies.
Executive Summary 4
SWOT Analysis 6
Taiwan Real Estate/Construction SWOT 6
Taiwan Political SWOT 7
Taiwan Economic SWOT 8
Taiwan Business Environment SWOT 9
Real Estate Market Overview 10
Market Analysis – Office 17
Rents and Yields 17
Table: Historic Rents – 2010-2011 (US$ per m2/month) 17
Table: Net Yield, 2011-2012 (%) 17
Table: Terms of Rental Contract/ Leases - Mid 2011 18
Industry Forecast Scenario 18
Table: Forecast Rents - (US$ per m2/month) 18
Table: Forecast Net Yield, 2008-2016 (%) 18
Market Analysis – Retail 19
Rents and Yields 19
Table: Historic Rents – 2010-2011 (US$ per m2/month) 19
Table: Net Yield, 2011-2012 (%) 19
Table: Terms of Rental Contract/ Leases - Mid 2011 19
Supply and Demand 20
Industry Forecast Scenario 21
Table: Forecast Rents - (US$ per m2/month) 21
Table: Forecast Net Yield, 2008-2016 (%) 21
Market Analysis – Industrial 22
Rents and Yields 22
Table: Historic Rents – 2010-2011 (US$ per m2/month) 22
Table: Net Yield, 2011-2012 (%) 22
Table: Terms of Rental Contract/ Leases - Mid 2011 22
Supply and Demand 23
Industry Forecast Scenario 23
Table: Forecast Rents - (US$ per m2/month) 23
Table: Forecast Net Yield, 2008-2016 (%) 23
Construction Industry Outlook 24
Table: Taiwan Construction And Infrastructure Industry Data 24
Table: Taiwan Construction And Infrastructure Industry Data 25
Construction and Infrastructure Forecast Scenario 26
Macroeconomic Outlook 31
Table: Taiwan - Economic Activity 34
Real Estate Risk Reward Ratings 35
Real Estate/Construction Risk/Reward Ratings 35
Table: Real Estate/Construction Risk/Reward Ratings 35
Business Environment Outlook 35
Table: BMI Business And Operation Risk Ratings 36
Institutions 37
Table: BMI Legal Framework Rating 38
Infrastructure 39
Table: Labour Force Quality 41
Table: Asia, Annual FDI Inflows 43
Table: Trade And Investment Ratings 45
Operational Risk 46
Competitive Landscape 47
Company Profiles 49
BES Engineering Corporation 49
Cathay Real Estate Development Company 50
Farglory Land Development 51
Huaku Development 52
Huang Hsiang Construction Corporation 53
BMI Methodology 54
How We Generate Our Industry Forecasts 54
Construction Industry 55
Bank Lending 56
Real Estate/Construction Business Environment Rating 56
Table: Weighting Of Indicators 57
Sources 59
BES Engineering Corporation , Cathay Real Estate Development Company , Farglory Land Development , Huaku Development , Huang Hsiang Construction Corporation ,
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