High-end commercial property transactions down over 60% in Q1
The value of high-end commercial property in Taiwan for the first quarter of this year fell more than 60 percent from a quarter earlier, according to statistics compiled by Yung Ching Realty Group ( ) with analysts attributing the fall to cautious sentiment toward a government tax reform plan.
During the January- March period, the transaction value of stores, offices and factories carrying a price of tag of NT$100 million (US$3.21 million) or higher each in Taiwan totaled NT$8.49 billion, down 62.5 percent from a quarter earlier, the data showed.
The first quarter figure actually fell to a three-year quarterly low, the statistics indicated.
In Taipei, the most watched property market in Taiwan, the transaction value of commercial property priced at NT$100 million or higher for the first quarter also fell 69 percent from a quarter earlier to NT$3.99 billion, Yung Ching said. Yung Ching is one of Taiwan’s leading property sales agencies.
Huang Tseng- fu, a manager with Yung Ching’s asset management division, said that the fall in commercial property transaction value largely reflected fears over the government’s plan to collect capital gains taxes on property sales.
According to the latest version of the tax plan proposed by the Ministry of Finance, home sellers will face a 35 percent tax if they sell their property after having owned it for less than one year. In cases where they had held the property for one to two years or two to 10 years, the tax rate will fall to 30 percent and 17 percent, respectively.
If they had held the property for more than 10 years before selling, the tax rate will fall further to 12 percent.
The tax reform measure marks a significant change from the present practice in which home sellers will be taxed based on their capital gains from the actual sales amount rather than the current government-assessed property value, which is merely a fraction of the selling price.
Huang said that the higher tax burden has turned many property investors away from the market.
In the first quarter, the transaction value of property simultaneously used for offices and factories totaled US$3.44 billion, accounting for 40.5 percent of total commercial property sales, representing the largest transaction category, Yung Ching said.
Yung Ching said that the technology sector served as the largest buyer by pouring NT$3.64 billion into the local commercial property market over the three month period.
According to Yung Ching, Gamania Corp. ( ), a Taiwan-based PC online game developer, spent NT$2.39 billion to purchase a commercial building located in the Neihu district of Taipei, the largest transaction in the first quarter. The purchase translated into a price of NT$401,000 per ping (3.3 square meters).