Challenging the ‘Roppongi effect’

By Hua Chang-i 華昌宜  / 

Wed, Apr 17, 2013 - Page 8

According to newspaper reports, government officials recently held a meeting in which they decided to offer the former site of the Republic of China Air Force’s General Headquarters, which lies on the north side of Renai Road in Taipei, to commercial use.

They are billing this development project as a case for world-class planning and want it to be initiated as soon as possible. All that remains to be done is to decide which developer will take control of the project.

Word has it that construction companies and other associated businesses are rubbing their hands eagerly at the prospect.

In their view, this is a good policy by the government and a great business opportunity for themselves.

However, is it a wise decision from the point of view of the overall public interest?

Unless Taipei undergoes a complete transformation and quickly becomes a world-class financial center comparable to London, Tokyo, Hong Kong and Shanghai, where is the demand for the large amount of commercial floor space that will be created by the project supposed to come from?

Construction companies are always brimming with confidence that supply can create demand, but while that may be true of a particular piece of land, it cannot be applied to the whole real-estate market.

One has to realize that the supply of commercial floor space in Taipei currently exceeds demand.

A case in point is Taipei 101, which was not fully rented out until nearly 10 years after its completion.

Lots of commercial buildings are being built right now in and around Nangang District (南港), and the Taipei Twin Towers are scheduled to rise soon close to the Taipei Railway Station.

In addition, the public has been told that the Guanghua Community near the Chiang Kai-shek Memorial Hall will be turned into a Taiwanese version of Tokyo’s Roppongi District after it is demolished.

That is not to say that a commercial zone built on the site of the old air force headquarters would be a sure failure.

Given its location and topographical integrity, it has some competitive strengths.

However, whatever success it may have will come at the expense of its neighbors because the demand that would be focused on this area will have originated somewhere else, and because any value that accrues on the site will lead to falling rent prices in other places.

A good example of such effects is the once-flourishing Living Mall in Songshan District (松山), which is now in decline.

A commercial zone at the air force’s former headquarters will compete with the other aforementioned zones and with the entire business area in Xinyi District (信義).

If the area in question had been private land, perhaps people would be happy to see it be repurposed for commercial use and competing with existing shopping malls, but it is necessary to bear in mind that the royalty fees that the government would collect from bidding for the project would come at the expense of property tax revenue from commercial buildings in other places.

Furthermore, given that the old air force headquarters sits on publicly owned land, its development should be planned with the interest of society as a whole in mind.

It should be used for what the nation is lacking the most: residential housing for rent and lease. It could also be made into a park. Its internal finances and external social effects can all be clearly worked out.

At the very least, a comparison could be made between dedicating the land to other uses such as these and the genuinely attainable benefits of commercial use.

In the past, the Council for Economic Planning and Development stipulated that a financial analysis be carried out for any engineering project costing more than NT$1 billion (US$33.2 billion), as well an economic analysis — in other words, a cost-benefit analysis.

Although the current plans for the former air force headquarters do not involve any government spending, it is a huge project that will cost hundreds of billions of dollars.

It is therefore odd that no social cost-benefit analysis has been carried out to assess the project, instead all it took was a meeting of representatives of various departments — seemingly under the spell of the Roppongi effect — to come to an instant decision on the matter.

The role played by the Taipei City Government has also been strange.

Even amid the intense competition between cities around the world, the government of Taiwan’s capital has so far failed to come up with long-term development goals or a strategic plan for land use.

Should government offices be dispersed more widely? Should land devoted to commercial use be more concentrated? How can we provide housing for medium and low-income households?

All these questions are relevant to the optimum usage of the land at the former air force headquarters. Does Taipei have no view about what is done with its own territory? Is it incapable of doing anything other than implementing decisions made hurriedly by central government officials?

Whether the air force site is put to the best possible use is quite an important issue, but an even bigger issue for the nation is the sloppy and rash way in which the central and local governments make their decisions.

Hua Chang-i is a former professor at National Taiwan University’s Graduate Institute of Building and Planning.

Translated by Julian Clegg