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Talk of the Day -- Downtown properties remain hot, other areas cooler

2012/06/07 21:28:39

Demand for commercial real estate in prime downtown districts remains high as large brand-name franchises seek to expand their presence in anticipation of the continued increase in the number of Chinese tourist arrivals, according to local media reports.

In contrast, demand for commercial properties in less tony locations has declined amid a domestic economic downtown, the reports said, adding that some landlords have been cutting rental fees to retain tenants.

Despite lackluster domestic economy, market sources said, the number of inbound Chinese tourists reached 835,000 in the first four months of this year.

The total annual number could hit 2.5 million by the end of the year as more Chinese citizens have been allowed to visit Taiwan independently rather than as part of a tour group since late April, market analysts said.

The optimistic forecast is also based on the trend that more and more large China-based enterprises have picked Taiwan as the destination for incentive tour for their elite management personnel or employees, travel industry insiders said.

As a result, up to 80 percent of noted retail chains in various fields, especially those in restaurant business, are actively seeking to expand their presence in Taipei's premium shopping districts, commercial property brokers said.

The following are excerpts from a special report in the Thursday's edition of the United Evening News:

Yungching Asset Management Co. released the results of a recent survey of senior executives of major retail chains earlier in the day, which show that operators have become more cautious in selecting locations for their new sales outlets amid recent downturn in domestic stock transactions and looming electricity price hikes.

Nevertheless, survey data also show that those negative elements have not deter operators from expanding the number of their retail stores, especially those in popular shopping districts such as Taipei's Ximending and areas in the vicinity of Sogo Department Co. Zhongxiao East Road store and along Dunhua South Road and Fuxing North Road.

Citing survey findings, Huang Tseng-fu, a Yungching manager, said many giftware retailers are actively planning to set up retail outlets at popular night markets to cash in on business opportunities to be generated from increased Chinese tourist arrivals.

In addition, large supermarket and convenience store chains such as Matsusei, Wellcome, Pxmart, FamilyMart and Hi Life as well as fast fashion brand Uniqlo, footwear brand Daphne, cosmetics and drugstore chains Watsons and COSMED are also seeking to launch new stores in prime urban districts in metropolitan Taipei.

"All those companies are only interested in opening new stores at sites that have a large concentration of shopping malls, can draw a large crowd of tourists or are close to metro stations," Huang said.

In comparison, prospects for real estate in less swanky commercial areas are getting dimmer with demand cooling off, property agents said.

National Realty Co. Chairman Yeh Chun-chih said recent stock market fluctuations and consumer price hikes have taken toll on sales of shops in less bustling districts in Taipei and New Taipei.

"Over the past month, landlords of commercial spaces in those regions no longer threaten to raise rental fees and have instead offered more attractive terms to retain tenants," Yeh said.

In the past few years when housing prices skyrocketed in Taipei and New Taipei, quite a few affiliates of his company were forced to relocate because of sharp rises in rental fees, Yeh said.

"The situation has changed lately. At least four of them have received phone calls from their previous landlords inviting them to return by offering better leasing terms," he added.

Outlook for pre-sale housing units has also worsened amid renewed eurozone debt concerns and sluggish domestic economy, market sources said.

The number of new housing projects launched in May declined from the month-earlier level and advertising volume also decreased by 12 percent while the range for price negotiations expanded by more than 10 percent, according to the sources. (June 7, 2012).

(By Sofia Wu)