The lack of office transactions meant prime office yields in Taipei were unchanged at 2.5% for the third consecutive quarter. The continued low interest rate environment is placing local property owners under very little pressure to sell, enabling them to hold prices firm.
Total office net absorption in Taipei surged to 14,652 ping in Q2 2018, driven by strong demand for medium and large office units in both Grade A and Grade B offices. Leasing activity was led by professional services firms and local start-ups. Several multinational companies relocated for flight to quality purposes, while selected local start-ups committed to large quality office spaces in CBD areas as a means to attract talent.
Leasing demand for Grade A offices is expected to remain robust, driven by consolidation and expansion by technology and professional services companies. On the other hand, Grade B office vacancy is forecast to increase modestly over the next two quarters as a result of several large corporates moving to newly built Grade A office buildings.