Real estate, cash top choices for asset allocation

By Crystal Hsu  /  Staff reporter

Fri, Mar 28, 2014 - Page 13

Real estate, cash and and insurance policies remain the top asset allocation choices among Taiwanese, although their popularity has been somewhat eroded by yuan deposits due to competitive yields, a Chinatrust Real Estate Co (中信房屋) survey showed yesterday.

A total of 39.7 percent of respondents cited real estate as their favorite tool this quarter, down from 41.2 percent three months earlier, but still topping the list for the 21st straight quarter, the survey found.

Cash ranked second with 15.4 percent, compared with 18 percent in the previous quarter, the survey showed, indicating that Taiwanese investors are conservative when managing their wealth given the low interest rates on savings.

Insurance policies came in third with 10.8 percent, falling 4 percentage points from a quarter earlier, the survey showed, after the Financial Supervisory Commission lowered assumed interest rates last year, hence raising policy costs.

“While the rankings of the different options have remained mostly unchanged for the past three months, they are losing their appeal amid the fast growth of yuan time deposits,” Chinatrust Real Estate chairman Chris Cheng-Yu (鄭余正全) told a press briefing.

Banks offer interest rates of 2.5 percent to 3 percent for yuan time deposits, which are competitive with savings-like insurance policies and higher than rental yields that average 2 percent for properties in Taipei, Cheng-Yu said.

That explained why investment in foreign currencies ranked fifth at 9.4 percent among Taiwanese, slightly behind precious metals at 9.6 percent.

Yuan deposits accounted for 73.4 percent of foreign currency holdings, the survey showed.

As of late last month, yuan deposits stood at 247.05 billion yuan (US$39.77 billion), up by 32.53 billion yuan from January, as Taiwanese actively increased their positions, attracted by the currency’s recent pullback in value, central bank data showed.

Many Taiwanese voiced their wish to own a house, especially among young first-time buyers, the survey found.

About 56 percent of first-time buyers intend to realize their wish in the next two years, with the budget for a home in Taipei averaging NT$14.85 million, it showed.

“The budget can buy a small apartment with two bedrooms and would require a mortgage of NT$55,000 a month for 20 years,” Cheng-Yu said, adding that only households with a monthly income of NT$80,000 or more could bear the burden.