Demand for Taipei prime office space rises-Jones Lang

* Closer China ties dent fall in availability rate

* Rents to decline less than earlier expectations

* Chinese firms interested in setting up shop in Taipei

TAIPEI, June 24 (Reuters) - The availability rate of prime office space in Taipei this year is likely to fall less than earlier expectations as closer ties with former political rival China helps boost demand for the island's real estate.

The availability rate for prime office space will likely be at about 15 percent this year, compared with a March forecast of 18 percent, Tony Chao, managing director of Jones Lang LaSalle (JLL.N) in Taiwan told reporters.

Rents will also possibly fall by a smaller degree this year compared with a previous forecast of about 15 to 20 percent, the property services company said.

"Rents could fall by about 15 percent this year, with the drop becoming apparent in the third quarter," Chao said. "But compared with Hong Kong, Singapore and Shanghai, the rate of decline is considered small."

Chao also said he expected demand for office space from Chinese investors to pick up only from next year.

"I visited Beijing last month, and many state-linked companies expressed interest in coming to taiwan. But there are still policy issues, and it typically takes about six months to find a space, so the market could be weak in the short term," he said.

Easing tensions with China, which claims self-ruled democratic Taiwan as its own, has spurred renewed interest in the island's economy. Its stock market has surged over 50 percent since hitting a trough in January this year. (Reporting by Roger Tung; Writing by Kelvin Soh; Editing by Chris Lewis)