Executive Yuan says yes to draft bill for real estate

The Executive Yuan yesterday approved a draft bill to securitize local real estate assets, paving the way for the privatization of national freeways and offering a financial solution for the capital-short Taiwan High Speed Rail Corp (台灣高鐵), contractor of the north-south high-speed rail.

Real estate asset securitization, a mechanism whereby banks can repackage collateral and sell it to investors as securities, is expected to help increase liquidity for banks.

The Real Estate Securitization Act (不動產證券化條例) will proceed to the legislature for further review and final approval.

The Cabinet hopes the Legislative Yuan passes it into law during the current legislative session in a bid to revitalize the local real estate market.

"The concept of the statute is to transform investment in real estate from mere ownership to negotiable securities which have more fluidity and economic benefits," said Ho Mei-yueh (何美玥), vice chairwoman of the Council for Economic Planning and Development.

Ho made the remark after the weekly closed-door Cabinet affairs meeting yesterday morning.

The statute defines "real estate" as land, buildings, roads, bridges, tunnels, tracks, piers, parking lots and objects built above ground and with economic value.

According to a recent industry report, the draft -- if passed -- may do little to help the property market buried in 1.2 million excess homes. That market, which last year just passed one of its most depressing years on record, could be facing more gloom if the government doesn't take concrete action such as opening the market to Chinese investors, according to industry groups. In a February commercial property market report, Colliers Jardine Taiwan Ltd concluded that government assurances last year -- including opening the sector to foreign and Chinese investors, direct three links with China and revisions in the insurance law -- did not square with actual constraints.

"None seemed able to breathe life into the stricken commercial real-estate market," the report said. According to Colliers Jardine, the market's main problems are that "Taiwan is not international enough, the market is too small, cross-strait relations are still unclear ... no clear improvement of the domestic political situation and rental returns are unattractive."