Taiwanese life insurance companies and developers and foreign funds plan to invest NT$150 billion (US$5.08 billion) in local commercial properties this year to improve earnings and use up idle funds, Savills Taiwan Ltd (第一太平戴維斯) said yesterday.
The UK-listed real estate service provider expects property prices, both commercial and residential, to stay firm despite a series of government measures to cool the market.
“More funds will flow into the commercial property market this year, encouraged by stable rental incomes and low capital costs,” managing director Cynthia Chu (朱幸兒) said.
Chu expects domestic insurers to channel NT$90 billion into real estate investment this year, while foreign funds will put in another NT$30 billion, based on interviews with different firms. Local land developers and investors from other sectors plan to contribute another NT$30 billion.
Chu, whose company was ranked the world’s fourth largest real estate brokerage by turnover last year, said property price corrections were unlikely as long as interest rates remained depressed while liquidity was ample.
“That is why we expect the luxury tax will have a limited impact on property prices, though it may slow transactions for a while,” she said.
The market could start to reverse if interest rates for home loans rise from lower than 2 percent to 4 percent and the loan-to-value ratio is capped at below 60 percent, from the current 65 percent, Chu said.
Frank Marriott, company senior director for real estate capital markets, said foreign funds are interested in joint development ventures in the region, including Taiwan, where rental yields are too low to be attractive.
Asian markets generated 41.3 percent of the company’s total revenue last year, up from 37.5 percent a year earlier, Savills statistics showed.
Raymond Lee (李偉文), company chief executive in Greater China, agreed, saying that home trading in Hong Kong fell 30 percent after the introduction of stamp duty, but prices continued to rise.
Lee said the duty and other tightening measures had failed to curtail demand in Hong Kong, especially for luxury housing units due to their limited supply.
Lee, who helped close NT$75.8 billion in property deals in the territory last year, said there was no fear of a bubble bursting as long as interest rates remain below 5 percent.
Albert Lau (劉德揚), Savills executive director in China, said he remained bullish about the property market in the world’s most populous market where property transactions had plunged 60 percent to 70 percent following assorted credit controls.
“A population of 1.37 billion and the fast-growing economy bode well for the property sector,” Lau said.
The company employs 21,000 staff in 200 offices across 36 countries, with a workforce of 17,384 in Asia.
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