1.Tech industry boosts buying momentum Q3 commercial real estate hits 20-quarter high

2024.10.01 Business Times I Kuo & Tien/Reporter

Savills released its third quarter commercial real estate market report. Driven by the warmer economic performance and strong demand from the technology sector, domestic commercial real estate and land purchases have increased significantly, with the value of large-scale commercial real estate transactions (a single transaction of $300 million or more) reaching $56.7 billion in the third quarter, representing a quarterly growth rate of 121%, and an annual growth rate of 176%, which is the largest transaction scale in 20 quarters. In the first three quarters, the total transaction value reached $124.9 billion, representing an annual growth rate of 33%, and the transaction scale was the highest since the interest rate hike.

Builders actively promoted the land buying in the third quarter, with land transactions reaching $104.8 billion, and the transaction scale of $100 billion in a single quarter is even rare in the past years, and the cumulative transaction amount in the first three quarters reached $200.4 billion, which has already exceeded the annual transaction scale in 2023.

The technology industry is the biggest promoter of commercial real estate purchases this quarter, investing a total of $39.9 billion, accounting for 70% of the quarter's top 5 deals, the first three are all included by semiconductors, including TSMC, Taiwan Micron and Sun Micron Semiconductor and other major manufacturers, are purchasing plants to expand the scale of the production line in Southern Taiwan, of which TSMC purchased the Qunar plant with $17.1 billion to become this year's largest transaction of commercial real estate.

Coco Ting, Senior Associate of Savills Research, pointed out that in 2020, when Taiwanese businessmen returned to Taiwan to set up factories in large numbers, TSMC had spent $10 billion in Tainan to purchase HANYU Colorful Crystal and other companies' factories, and this year's wave of semiconductor factory expansion is even more powerful than the previous year, stabilizing Tainan as a technological cluster in Southern Taiwan, and at the same time reflecting the importance of timeliness in the layout of the semiconductor industry, so in addition to the application to the public sector to purchase Therefore, in addition to applying for land from the public sector to build factories, purchasing existing factories that meet the specifications is also one of the expansion strategies.

Benefiting from the outstanding performance of the residential and pre-sale markets, builders' confidence in launching projects has increased, driving the land market to a surge in buying activity in the third quarter, with transaction value exceeding $100 billion. Among them, the amount of land hunting by builders reached 70.6 billion dollars, and the momentum of land purchasing showed double growth. Taichung City has become the county and city where major builders are actively setting up their business, with a transaction amount of NT$34.7 billion in a single quarter. The Xitun and Nantun districts have even attracted builders such as Xinmeiqi, Xingfufa, Yaxin, and Farglory to purchase land with a single transaction amount of more than NT$3 billion, which shows that even though the central bank is still tightly controlling the amount of land financing by the builders, the large-scale builders are actively expanding the land bank to reserve for the future, on the basis of the strong sales of residential properties and optimism about the future development of the market. The first three quarters of this year saw the purchase of land by builders. In the first three quarters of this year, a number of builders, including Asia Sun, Farglory and Hing Fu Fa Group, have exceeded $10 billion in land purchases.

Ding pointed out that the central bank announced the seventh selective credit control just two weeks ago, large-scale land transactions amounted to 37.9 billion yuan, but Kaohsiung, Taoyuan and Taichung City Hall organized a large-scale land tenders are few builders to buy land, indicating that with the tightening of the capital and residential gas, as well as the impact of the credit control is still not clear, the short-term contractors to slow down the pace of land purchases.

Mr. Huang Ruinan, Chairman of Savills, said that although the central bank has taken measures to tighten market capital and strengthen credit control, the demand for corporate self-use is the main buyer of commercial real estate this year, contributing more than 65% of the transactions, so the impact on the market is limited, and the overall purchasing sentiment is more strongly linked to the domestic and international climate. With TSMC's aggressive plant expansion and plant construction plans progressing, the driving effect of the upstream and downstream industrial chain will continue to ferment, the technology industry's buying power is growing steadily, and the existing factories in and around the Science Park will continue to benefit from the fourth quarter of the year, many of the transmission manufacturing industry will continue to activate factory revitalization plans, and the double-boosting of supply and demand will continue to push up the momentum of industrial real estate transactions. In terms of investment and buying, the central bank's monetary tightening policy has led investors to be conservative and wait-and-see, but with interest rates remaining relatively low, sellers are not in a hurry to sell, and it will take more time for buyers' and sellers' expectations to be honed in the short term.