Sluggish economy strikes local real estate

“Taiwan public has adopted a wait-and-see attitude prior to the next presidential election,” said Eva Feng, a sales agent at a B&H Real Estate office in Taipei.

Feng explained that following the previous Chinese New Year, local Taiwan banks announced that they would stop lending money to buyers of apartments smaller than 20 ping (66 square meters). With the subprime crisis expanding worldwide, Taiwan banks have also learned to be careful when lending money, she said, noting that buyers of small apartments usually face more financial constraints.

“Taiwan people still want to invest in the housing market,” she went on, “but they are waiting for the right moment.”

Last Tuesday, Yeh Kuo-hua, a manager in charge of the luxury housing department of Yungching Real Estate Co., said that not only had the number of transactions in Taipei City and Taipei County shown a substantial decrease, but the prices of the luxury housing units sold in October also dropped about 5 percent.

Yeh added that the decrease occurred mainly because many potential buyers were taking “a wait-and-see attitude.” He said the most sought-after area was the rezoned Hsinban Special District — the base of the Taipei County government — which accounted for 27.8 percent of all transactions.

According to Yungching Real Estate, luxury housing refers to housing units priced over NT$30 million in Taipei City or NT$25 million in Taipei County.

Although the two elections in January and March of 2008 might result in political disturbances that could affect Taiwan’s real estate market, Yeh is still confident that luxury housing in Taiwan will continue to have a bright future, Yeh said.

He added that he expects direct trade, transport and postal links to be established between Taiwan and China after the elections, which would boost Taiwan’s luxury housing market.

Yeh pointed out that major real estate developers from China and Hong Kong have already demonstrated an interest in the housing market during recent trips to Taiwan.

On Nov. 19, a mainland Chinese delegation of real estate big shots and their Taiwanese counterparts probed the prospects of mutual investment in property markets on both sides of the Taiwan Strait at a cross-strait real estate summit in Taipei.

Feng Lun, chairman of the Beijing-based Vantone Group, said that after visiting Taichung, central Taiwan, he has found that most Taiwanese developers take time to produce fine work, compared with their Chinese counterparts, who “rush to put products on the market.”

Feng speculated that Taiwan’s housing market will boom further if Taiwan opens its door to Chinese investment and Chinese tourists, and if direct cross-strait transportation links are established.

Taiwan’s government has not yet fully opened Chinese investment in the island’s property and stock markets. Talks on opening direct cross-strait transportation links and Chinese tourists to Taiwan are also at a standstill due to disagreements over political or sovereignty issues.

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