Taiwan's hot property market is poised for further high growth in the next few years because of solid demand, but more incentives will be needed to sustain the real estate boom, property developers and market watchers said yesterday.
"I think the [real estate] market will get better year by year," Chao Teng-hsiung (趙藤雄), chairman of the Farglory Group (遠雄企業團), said at an industry forum on Taiwan's market.
Chao's remarks came on the same day that a government report said that the local real estate investment climate had remained stable.
Released by the Architecture and Building Research Institute under the Ministry of Interior, the report showed that the composite index measuring the housing market for the fourth quarter last year was 12 points, unchanged from the previous quarter.
However, Chao said the local market has obviously lagged behind the international real estate trend, which has shown an average 10 percent annual increase over the past few years.
Therefore, he expected the market to rise by 10 percent to 15 percent in the next couple of years, he said.
If the government opens direct transportation links with China, the market value could as much as double in the next three years, he said.
Two crucial factors influencing the property market here are foreign investment and overseas funds, Chao said.
Therefore, the government should cut the red tape that hinders many foreigners from purchasing real estate and cancel the nation's inheritance tax to lure more investments by overseas Taiwanese businesspeople in the market.
Echoing Chao's viewpoint that foreign funds play an important role in the growth of the nation's real estate market, Peter Kurz, managing director of the Taiwan branch of Citigroup Global Markets, said that the government should do more to attract foreign investors.
Opening up direct transportation with China and accelerating urban redevelopment would both help to attract foreign funds, Kurz said.
Improving the infrastructure will also add value to properties, both commercial and housing, he said.
Once dubbed "Mr. Taiwan" by the local media for his understanding of the business scene, Kurz said local developers should come up large-scale projects, which are major investment targets for foreign investors.
Another incentive driving the growth in the nation's real estate market are the relatively low office rental costs found in Asia, said Tony Chao (
In Taipei, for example, the average rental rate for Grade A office space is NT$2,300 (US$69.54) per ping (3.3m2), Chao said, citing company statistics.
The rate in Seoul is about NT$4,700 per ping and that in Hong Kong is more than NT$9,000 per ping, he said.
Rental of office buildings in Taipei is likely to rise by 6 percent to 10 percent this year and another 10 percent next year on strong demand, Chao said.
Lai Cheng-i (賴正鎰), chairman of property developer Shining Group (鄉林集
團), called on the government to allow Chinese investment in the nation's
real estate market.
Chinese investors have major interest in hotels, shopping malls and office
buildings because of their significant growth potential, Lai said.
“A lot of Chinese funds go to investment targets in other countries because
of the investment ban put in place by the Taiwan government,” Lai said.
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