Foreign direct investment in the property market in the second half of the year is expected to follow the strong growth recorded in the first half, according to a report issued by a corporate property agent yesterday.
The Jones Lang LaSalle report Global Real Estate Capital -- the Search for Opportunity Intensifies estimated that the amount of foreign direct investment in the real-estate sector reached NT$6.2 billion (US$184.5 million) in the first six months of the year.
Deals included in this figure were the AIG-affiliated Nan Shan Life Insurance Co's (南山人壽) acquisition of the Power Center in Jhonghe (中和), Taipei County, and Lone Star's purchase of Le Petite Sherwood Hotel and the Sherwood Office Building.
"Foreign buyers have been active again in the second half of 2005 and we expect the figure for the second half year to be considerably higher, with foreign property funds and insurance firms again the most active buyers," the report said.
Taiwan's real estate investments are in line with those in the Asia-Pacific region, which Jones Lang LaSalle said is experiencing the strongest growth compared with other regions.
The value of Asia-Pacific transactions in the first half of the year jumped by 45 percent from a year ago as it catches up with other larger, more developed regions, the report said.
All regions saw higher transaction volumes in the first half of the year, with cross-border investment reaching US$52 billion, or 21 percent growth compared with the same period last year.
The rapid globalization effect seen in direct real-estate investment is partly driven by the mounting pressure to locate investment targets that can generate higher returns.
Low interest rates, improving property fundamentals, aging populations and increasing pension savings are driving an unprecedented weight of capital, which in turn is compressing yields in many international markets, said Guy Hollis, international director in Jones Lang LaSalle's International Capital Group.
"In [the] Asia-Pacific [region], the search for higher returns is likely to accelerate growing volumes in emerging nations. Global investors are also increasingly exerting significant influence on local investment markets through competition with domestic and regional players," he said.
For this reason, investors cannot afford to disregard international investment opportunities which are increasingly providing relatively significant returns and strong diversification characteristics for property portfolios, Hollis said.
Looking to next year, Sinyi Real Estate Inc (信義房屋), the nation's largest housing agent, predicted that government incentives will be needed to activate the office building market while the housing market should continue to develop smoothly as long as the threat of bird flu eases, said Victor Chang (張欣民), director of Sinyi's research and development division, during a telephone interview yesterday.
If the government lifts restrictions on Chinese tourists soon and even on direct links next year, the office market will get a boost, he said.
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