CBRE Taiwan Marketflash
Taipei – CBRE releases its Marketflash on Taiwan Central Bank policy rate cut. On March 24 the Taiwan Central Bank lowered its policy rate by 12.5 basis points for the third consecutive quarter. Whilst the rate cut was widely expected, the decision to loosen mortgage restrictions came as a surprise, suggesting the real estate market is in worse shape than had originally been thought. In the commercial real estate market, institutional investors may become more conservative in response to the rate cut. CBRE Taiwan expects commercial property owners in Taipei City will reduce asking prices by 10% to 15% over the next two quarters as they seek to close deals amid the subdued market.
Joseph Lin, Managing Director of CBRE Taiwan comments, “institutional investors may become more conservative in response to the rate cut, which has been prompted by the weak economy. Despite minimum yield requirements being revised down to 2.415% from 2.485%, insurance companies are unlikely to turn more active, “
“We expect commercial property owners in Taipei City will reduce asking prices by 10% to 15% over the next two quarters as they seek to close deals amid the subdued market. Owner-occupiers will be the most active. Another noticeable trend will be for more local companies to seek opportunities to invest overseas,” Lin adds.
On March 24 the Taiwan Central Bank lowered its policy rate by 12.5 basis points for the third consecutive quarter, pushing down the discount rate to 1.5%. The move comes against the backdrop of a weakening economy and continuing decline in total exports. The Bank also announced the removal of all restrictions on mortgage and land loans, with the exception of loans for luxury homes.
While the residential market has been affected by tightening measures, buyers remain cautious about purchasing in what is still a highly priced market. Although the relaxation of loan restrictions may stimulate buyer interest, CBRE Taiwan believes residential property sales will not rebound significantly in the coming months. This is due to the continued price gap between sellers and buyers. Most vendors are in no rush to sell given the low cost of borrowing, while buyers continue to adopt a wait-and-see stance in the hope that prices will fall further.
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