Mon, Feb 06, 2012 - Page 12 News List

INTERVIEW: Farglory betting on recovery in the housing market

The implementation of several new policies led to a large drop in the number of housing transactions last year. Hoping to boost the market, Highwealth Construction Corp announced a plan last month to cut prices by 25 percent, putting pressure on competitors to follow suit. However, Chao Teng-hsiung, chairman of Farglory Land Development Co, the nation’s leading construction firm, is betting on a market recovery. Chao set out his views in an interview with a group of reporters that included Crystal Hsu of the “Taipei Times”

Taipei Times (TT): After a sluggish year, how does Farglory Land Development Co (遠雄建設) view the housing market and the company’s sales this year?

Chao Teng-hsiung (趙藤雄): The housing market had its worst year last year. The introduction of the special sales levy [in June] and the transaction registration rule chilled transactions, while the European debt crisis weakened confidence.

This year may see a recovery now that the presidential election is over. The government has promised to continue friendly ties with China and will be more rational in dealing with housing policy after President Ma Ying-jeou’s (馬英九) re-election.

We don’t think more policies will be implemented that work against the market.

The Ma administration will not be able to fulfill its pledge of raising the nation’s per capital income to US$30,000 a year if housing prices are frozen.

The problem of increasingly unaffordable housing lies in wage stagnation. Policymakers should address that issue instead.

Farglory expects sales to pick up noticeably during the Lunar New Year holidays — hitting more than NT$150 million [US$5 million] per day, or NT$4.5 billion this month [January]. The fact that many Taiwanese businesspeople returned from overseas to cast their votes will help. A sizable number of them are interested in acquiring real-estate properties at home and have made appointments to look at our products.

TT: Will Farglory adjust its prices following Highwealth Construction Corp’s (興富發建設) announcement that it will cut prices by up to 25 percent for two new presale projects this year?

Chao: We will not lower prices for any product in any part of the country this year. Rather, if oil, raw material and land acquisition costs keep going up, we may have to pass the burden on to consumers. We will keep a close eye on the issue.

Companies have different pricing strategies in line with their material and construction costs, as well as financial conditions. Some may cut prices, while others may opt to increase, as they see fit. It would be unfair to set the same prices for all products.

I don’t agree with the forecasts by so-called experts that housing prices will drop this year. Having been in the [construction] business for several decades, I’m better equipped in terms of professional knowledge and can better predict market trends.

To begin with, a fall in the price for land is unlikely in northern Taiwan. Farglory has employed more than 20 people who are tasked with looking for land that is for sale on a daily basis. There just aren’t many transactions at the moment because of a lack of supply. Past deals have lent support to rising costs.

TT: Would you talk about Farglory Development’s expansion plans in China this year?

Chao: The company’s joint venture — Straits Construction Investment (Holdings) Ltd (海峽建設投資有限公司) — has already rolled out a housing project valued at 20 billion yuan [US$3.2 billion] in Pingtan (平潭) in Fujian Province and will launch a 20 billion yuan project in Nanjing in May or June this year. I also have some personal [real-estate] investments in Qindao, Tianjin and Suzhou in China.

TT: What are Farglory’s land development plans in Taiwan this year?

Chao: Currently, we are pitching projects in Taipei City, New Taipei City (新北市) and Taoyuan. We are confident that revenue will hit NT$45 billion this quarter.

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