CBRE Releases Taiwan Marketflash
Taipei – On Friday May 20, Tsai Ing-wen was sworn in as Taiwan’s new president, marking the third transfer of power since 1996. Her new government faces a number of immediate challenges, the most urgent of which will be to revive the ailing economy, with Taiwan having recorded negative GDP growth for three consecutive quarters.
The new government is also expected to enact a number of new polices that will have a major bearing on the real estate sector. These include:
Transform Taiwan’s economic structure by promoting five major innovative industries and fostering industrial clusters across the island.
This measure should support the growth of high-tech manufacturers, which have already become a major investor in Taiwan’s real estate market. CBRE Research data show they accounted for 17% and 55% of total investment turnover in the land sector in 2015 and Q1 2016, respectively. CBRE Research also recommends the government increases land supply at reasonable prices and restricts speculative activity in industrial parks.
Amend the Urban Renewal Act to facilitate and accelerate urban renewal, and proactively initiate large-scale redevelopment projects.
An increasing number of developers will participate in redevelopment projects led by the government, as new measures will reduce the time and risks involved in negotiating with land owners and obtaining development rights. This long-awaited amended bill will also encourage more developers to invest capital in old and run-down areas.
Increase the holding tax to curb speculation and ultimately tax real estate based on market value.
This measure will ensure property transaction volume remains low in the short term, with owner-occupiers being the most active buyers. As more stringent tax rules are implemented, buyers will become more conservative towards their offering prices, prompting some sellers to adjust their expectations.
Engage in positive dialogue with Mainland China with the aim of ensuring Cross-Strait relations remain stable.
International visitor arrivals to Taiwan have increased by an average of 15% y-o-y over the past eight years, thanks mainly to a significant increase in arrivals from Mainland China. In 2015, total visitor arrivals hit a new high of 10.4 million, with Chinese tourists accounting for 40%. However, the Chinese government is reported to be planning to reduce the number of Chinese tourists allowed to visit Taiwan during May and June 2016. As the hotel and retail sectors will be adversely affected by the drop in Chinese tourists, CBRE Research recommends that the government promote domestic tourism and increase efforts to attract visitors from elsewhere around the world.
Joseph Lin, Managing Director of CBRE Taiwan says, “The investment market will remain quiet in the next few months. However, a number of institutional investors are likely to switch to buy mode once they see a clearer picture of the government’s policy direction. Total investment turnover for commercial property is therefore forecast to rebound modestly by the end of 2016.”
Disclaimer:
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
