Construction firm bullish on property market outlook

By Jackie Lin  /  STAFF REPORTER

Fri, Jun 23, 2006 - Page 11

The nation's housing market should experience a sustained boom over the next three years as international funds flow into Asia to profit from its undervalued real estate sector, the Shining Group (鄉林集團), a Taichung-based construction firm, said yesterday.

Difficulties in acquiring land and dramatic increases in the price of construction materials have driven up housing prices nationwide by between 20 percent and 30 percent since last year.

The firm expects prices to rise by another 15 percent by year's end.

However, compared with a minimum 100 percent increase in European, US and Chinese housing prices, the local market held huge potential for investors both at home and abroad, company chairman Lai Cheng-i (賴正鎰) said during a press conference in Taipei.

Strong sentiment would also be bolstered by the prospect of closer ties between Taiwan and China, he said.

The government plans to allow more Chinese tourists to visit Taiwan and to operate more cross-strait charter flights for cargo and passengers by around the fourth quarter.

Lai hailed this as a big boost to further stimulate the real estate sector.

Against this backdrop, Lai said he was confident that "Shining Group's revenues can expand by 20 to 30 percent per annum for the next three years."

Shining, which is the operator of the upscale resort The Lalu (涵碧樓) on Sun Moon Lake, reported after-tax revenues of NT$2.73 billion (US$83.6 million) last year, up 22 percent from the previous year. Profits rose by 34.2 percent year-on-year to NT$607 million.

The nation's largest housing agent, Sinyi Real Estate Inc (信義房屋), expressed optimism over the market outlook for the second half of the year, but had reservations about the years to come, citing uncertainties.

"There has not been much change in economic fundamentals and the fourth quarter is usually the boom season. Political upheaval from the Taipei and Kaohsiung City mayoral elections in December will only be short-lived," said Victor Chang (張欣民), director of the research and development division at Sinyi Real Estate.

With lower interest rates, inflationary pressure and expectations for direct links with China, Chang said the ratio of house shopping for investment purposes had risen from 12 percent in 2003 to exceed 16 percent last year.

Looking ahead, "Supply and demand still play a crucial role in determining the ups and downs in housing prices, but the fallout from political uncertainties cannot be ignored," Chang said.