Property prices to keep rising, says local developer

By Amber Chung  /  STAFF REPORTER

Fri, Feb 16, 2007 - Page 12

The nation's rising real estate prices are expected to continue their upward march in the Year of the Pig on expectations of the opening up of Taiwan to Chinese tourists and continuous capital inflow, a local developer said yesterday.

"There are signs signaling that it is still a bull market in the real estate sector in the Year of the Pig," Lai Cheng-i (賴正鎰), head of the Taichung-based Shining Group (鄉林集團), said in a statement released yesterday.

Indicators include a rising mortgage loan balance exceeding NT$4.4 trillion (US$133.7 billion) at the end of last year, and a construction lending balance hitting a record high of NT$849.5 billion. This showed there was a strong demand and corresponding supply, as well as abundant capital in the market, depressing interest rates, Lai said.

Capital inflow by overseas Taiwanese companies and foreign investors in anticipation of further cross-strait liberalization -- Chinese tourists, holiday chartered flights and eventually regular direct flights -- would also bolster the property market, he added.

Chinese tourists on average have the second highest travel budgets worldwide after Japan, the statement said, citing a survey by the Taiwan Institute of Economic Research (台經院).

The average retail spending of each Chinese tourist is estimated at US$987 per trip, or one-third of the total travel budget, the highest in the world.

The number of Chinese travelers to Hong Kong in 2004 was 12.2 million, whose consumption accounted for 12 percent of total retail sales in the territory that year and helped create 16,500 new jobs, the survey said.

"This will not only help the local tourism industry but also bolster strong demand for commercial property for the development of department stores and office buildings," Lai said.

Commercial buildings in the greater Taipei and Taichung areas will be popular targets for foreign investors this year, he predicted.

In turn, housing prices could see a 5 percent to 10 percent markup in Taipei City in the first quarter, which could further strengthen later this year, Lai said.

Similarly, Shin Kong Financial Holding Co (新光金控) chairman Eugene Wu (吳東進) said earlier this week that he was bullish about the real estate market in Taipei and Taichung, and that it would benefit from Chinese tourists and the beginning of bullet train operations.

Shin Kong planned to launch an upscale housing project in Taichung this year, he said.