Wed, Jan 13, 2016 - Page 13 News List

Land transactions fall for third year

By Crystal Hsu  /  Staff reporter

Land transactions totaled NT$151.9 billion (US$4.51 billion) last year, shrinking for the third consecutive year and by 6.4 percent from 2014 as unfavorable policies drove out developers and investors, a survey by international property consultancy DTZ showed.

The market might dwindle further this year, as players might remain conservative over concerns that the next government could take more action regarding property investments, analysts said.

“The real-estate market has lost growth momentum for years after a series of tax hikes to raise holding costs for land and house owners,” Charlie Yang (楊長達), director of real-estate appraisal for DTZ, said by telephone yesterday.

Yang said he did not see any sign of improvement on the horizon, with the likelihood of a transition of power in May.

Prospective buyers are likely to stay on the sidelines until new policymakers make known their intentions regarding the market, Yang said, adding that some public construction projects hit the wall after changes of local administrations after the November 2014 nine-in-one elections.

Deals amounted to NT$52.5 billion in the final quarter of last year, more than double the volume of the previous three-month period, thanks to the sale of CTBC Financial Holding Co’s (中信金控) former headquarters in Taipei’s Xinyi District (信義).

Taipei-based Chong Hong Construction Co (長虹建設) twice sold plots of land and won contracts to develop office buildings for customers to remain active and profitable, DTZ said, adding that the strategy set a positive example for peers to follow.

Government-sponsored rezoning and other activities drove 60 percent of deals, while private firms contributed 40 percent, affirming a sluggish market, Yang said.

Deals based on superficies rights accounted for 12.4 percent last year, while investors voiced concerns over steep hikes in rents, Yang said, adding that in some cases, the government raised rents by 40 percent over five years.

Self-occupancy demand is not subject to property tax hikes and is expected to continue to drive the property market this year, DTZ said.

Firms in technology and traditional sectors would build new factories in line with development plans, Yang said.

Pricing differences remain a drag on the market, though some sellers are willing to make concessions of 10 to 20 percent, DTZ said.

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