Taiwan's stagnant property market could see an initial injection of US$500 million by a foreign conglomerate, according to local bank executives.
The intentions of the unnamed conglomerate were revealed by an executive at Hua Nan Commercial Bank (華南銀行), which will act as the trustee for the foreign company.
Hua Nan will manage the property until the foreign group completes payment.
According to the executive, the conglomerate has signed letters of intent with the owners of at least ten commercial buildings and were in talks with others.
The move comes in the wake of an approval from the legislature to halve the land-value incremental tax for two years in an attempt to boost the real-estate sector.
Last year, the government abolished restrictions on foreign investors with holdings in local real estate that barred them from renting, leasing or trading their holdings.
Observers say that the move should prove attractive for large foreign companies as it will likely force prices down from hugely inflated highs.
"We could see prices bottom out within the next two years, which would definitely inspire interest among foreign firms," said one researcher.
Taiwan's local media has speculated that giants such as ING Aetna Life, Metropolitan Insurance and Annuity are eyeing Taiwan's property market but are waiting for a rise in the rates of return.
Currently supply in the Taipei office-space market far outstrips demand with real-estate firms generally predicting this trend to continue as new commercial projects are set to be completed in the new year.
However the operators of one new shopping center, the Breeze Center (微風廣場) -- which has seen high occupancy rates since opening last year -- are predicting a return of NT$5 billion in the first year, according to real-estate consultancy firm Jones Lang Lasalle.
"If the deal goes through, it would be the first property transaction with a bank serving as trustee," said Sun Tzu-chiang, who is overseeing such deals for Hua Nan Bank.
"The sector has been sluggish for a long time and property now looks cheap."
That's why they want to invest here. "But they are only interested in commercial or industrial-use buildings in prime areas," said Sun.
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