Thu, May 29, 2008 - Page 12 News List

Real estate sector faces an uncertain future

QUESTION MARKSLuxury homes in Taipei’s Xinyi District have not performed as well as similar properties in cities like Hong Kong, Shanghai and Singapore

By Joyce Huang and Kevin Chen  /  STAFF REPORTERS

Local commercial and luxury-home properties could enjoy a big upside should further political liberalization occur and the local economy get a boost from closer trade ties with China, a real-estate consultancy firm said yesterday.

“It is likely that prices for office space in Taipei will soon go up as the vacancy rate tightens,” Billy Yen (顏炳立), general manager of real-estate consultancy DTZ (戴德梁行), told a seminar.

Luxury homes could further benefit as unit prices, which average NT$1.6 million (US$52,400) per ping (3.3m²) in the upscale Xinyi District have underperformed in comparison with luxury residential properties in major Asian cities such as Hong Kong, Shanghai and Singapore, he said.

DTZ is the organizer of an auction tomorrow to collateralize the Agora Garden (亞太會館) hotel at a floor price of NT$14.9 billion.

Yen was pessimistic about the residential property market, except for those in Taipei, which could become defensive amid any potential property slump.

He said residential prices outside Taipei had gone up to an unreasonable level.

He rejected the likelihood that the local property market was experiencing a bubble and could collapse when the bubble bursts. He said foreign investors still think that the local property market’s growth momentum remains strong and prices are still low.

A report by Collier International, however, said office building prices had gone up so much that it had scared away potential buyers or office tenants, the Chinese-language Economic Daily News reported yesterday.

The report forecast the vacancy rate for the office building market could climb back up to exceed 10 percent this year from last year’s 9.47 percent, the paper said.

Meanwhile, statistics released by the central bank yesterday showed that the property market may be showing signs of weakening. Loans for construction have dropped for a second straight month to NT$1.018 trillion last month, tallies showed.

The NT$8.65 billion, or 0.85 percent, decline in such loans — which mostly include loans to construction companies for housing projects and land development — in April from the previous month has accelerated from a monthly decline of NT$2.07 billion, or 0.21 percent, in March, data showed.

The central bank’s latest data also indicated weakening consumer loans in other categories. Car loans presented a continual decline since July 2006 and fell to NT$81.21 billion last month, a reduction of NT$1.8 billion, or 2.18 percent, from the previous month.

Meanwhile, revolving credit for credit cards totaled NT$251.9 billion last month, which posed a monthly decline since the peak of NT$465.6 billion in December 2005, tallies showed.

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