The nation's moribund real estate market may get a painful but necessary shot in the arm when property prices tumble as the financial sector sheds bad loan collateral, market watchers say.
"Large-scale auctions of properties by [asset management companies] may trigger discounts as high as 40 to 50 percent," said Andrew Liu (
With an enormous market glut -- 1.25 million vacant residential units nationwide -- and more than NT$500 billion in bad real estate debt, current market prices are not expected to hold.
"Overlending on real estate ventures is a key reason why the government is keen to bring in AMCs to resolve the bad debt issue," Liu said. AMCs are charged with the difficult task of selling off the assets of insolvent financial institutions.
But while the Ministry of Finance works overtime setting up the AMC mechanism and drafting regulations to help banks shed bad real estate debt, the news may be too little too late for prospective home buyers.
"Approximately 84 percent of the adult population already own their own homes," Liu said.
Meanwhile current property owners may be the most affected by the poor lending habits of the past as property prices decline to new lows.
"Based on [similar] experiences in Korea and Thailand, we believe the AMC mechanism will have a negative effect on the market price of second-hand real estate products," said Borling Hwang (黃柏鈴), managing director at international property consulting firm Colliers Jardine.
But the nation's finance chief sought to paint a different picture, saying the fallout will be limited.
"Auctioning of bad loan collateral by AMCs is not expected to have a large impact on real estate market prices," said Minister of Finance Yen Ching-chang (
Of the roughly NT$1 trillion in bad banking industry loans, more than 53.9 percent, or NT$520 billion (US$16.25 billion), is in bad loan real estate collateral. The quality of these properties varies enormously. And AMCs, looking to make a fast buck off of the high risk ventures, will need the time to make properties more attractive to prospective investors.
"It will take at least a year before these properties will move from banks to [AMC] portfolios, as they will first need to make them more commercially viable," Liu said.
Most of the properties are in the rural parts of central and southern Taiwan. According to Hwang, foreign investors may swoop in to join the feeding frenzy -- if the price is right. "Foreign investment groups will be very interested in taking part if prices are attractive enough," Hwang said.
And while a nose dive in real estate prices may be a bitter pill for banks and property owners to swallow, pundits say the current market status leaves them few options.
"You rescue the local real estate market not by holding on to artificially [high] prices, but by pushing prices down and encouraging transactions," said Benny Hu (
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique