Taiwan set a record by outpacing China in terms of economic growth for the first time in 30 years. Taiwan’s GDP in 2020 grew by 2.98% compared to China’s 2.3% and even beating the estimated 2.58% by its central bank.1 Taiwan has managed the COVID-19 pandemic so well such that to date, there are only 4 cases per 100,000 people.2 They were thus able to avoid strict lockdowns and since overseas travel was cumbersome, domestic tourism has spurred spending, as seen in the 2% increase in household spending.3 In addition, companies such as Taiwan Semiconductors and Hon Hai Precision Industry (trading as Foxconn Technology Group) make Taiwan a semi-conductor producing powerhouse and the huge demand for semiconductors as the world competes to roll out 5G technology has also spurred Taiwan’s growth. Some experts even say that China might become reliant on Taiwan for chips as their trade war with US rages on with newly elected president Joe Biden shows no intent on releasing pressure on China.4
So, things are definitely looking up for Taiwan. But what does this mean for their property market? In the residential sector, residential property transaction has increased 14.9% in June from May to 19,774 units. House prices rose by 1.38% in Q2 2020 from Q1 2020, and 3.55% from Q2 2019.5 The residential sector in Taiwan is evidently unaffected by COVID-19, with housing transactions in the six major municipalities rising 36% on a year-on-year basis in September 2020.6 The growth was fueled by low interest rates and high loan amounts of up 90% of a property’s value. The central bank had to impose cooling measures by capping mortgage lending rates at 60% of the property’s appraised value for corporate buyers to curb residential property purchase.7
As for the commercial sector, Taipei City accounted for 93% of total office transaction volume in Q4 2020. The vacancy rate of Taiwan’s Grade A offices fell to 5.1% in 2019 from 7% in 2018 and was expected to be pushed down to 2.6% in 2020 due to absence of supply.8 However, COVID-19 struck and the vacancy of Grade A offices in Q4 2020 ended at 3.88% probably because business owners become more cautious. High office rentals seem like they are here to stay. Sources report that the ongoing tension between US and China will motivate more China-based Taiwan companies to move back home.9
Retail revenue grew by 2.9% on a year-on-year basis in the first 2 months of Q4 2020. Despite this growth, average high street rents and new openings by foreign retailers in Taipei dipped by 6.9% and 75% respectively in Q4 2020 on a year-on-year basis.10 Unlike retail stores, F&B stores are eager to establish physical stores, accounting for 58% of new letting activity in Q4 2020.
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