Savills

Publication

Investment Brief - Sep 2023

REIT liquidations drive market activity

Investors are looking for opportunities with retail and offices in the CBD favoured.

  • As Taiwan’s exports plummeted by 18% in 1H/2023, the Department of Budget, Accounting, and Statistics revised down 2023 economic growth to 2.04%, facing a critical challenge to maintain the level above 2%.
  • The central bank has paused interest rate hikes again; however, another wave of selective credit controls has been announced, reflecting the poor performance of previous measures aimed at cooling the market.
  • The liquidation of Shing Kong No.1 REIT has driven transaction volumes this quarter to NT$49.6 billion, up 211% QoQ and 58% YoY.
  • Six assets owned by Shin Kong No.1 REITs were disposed of through open bidding for NT$30.7 billion with buyers including developers, professional nvestment institutions, REITs, and end-users.
  • Professional investment institutions were the main buyers, preferring office and retail assets in core areas, contributing NT$15.7 billion in total.
  • Land transactions have remained sluggish, with transaction volumes totaling NT$23.6 billion in Q2/2023, dropping by 29% YoY. Developers remain cautious and are cutting spending on land acquisitions.

The rate-hike pause and amendments to the Equalization of Land Rights Act are expected to enhance buyer interest in the commercial property market. However, the impact of the economic slowdown on the industrial property sector has been more pronounced and is expected to moderate both demand and price growth.

Erin Ting, Savills Research