Taipei , Taiwan

Taiwan property market continued to boom in the first half of 2007 and is expected to keep expanding over the next year, driven by various market and government’s incentives. The liberalization of the cross-strait transportation is believed to not only fuel the local tourism industry but also bolster strong demand for the commercial property along with the development of hotels, shopping malls and offices.

The government has carried out several incentives that will especially boost investments in national land or BOT projects for infrastructures. To promote new investment projects, the Ministry of Finance National Property Bureau has launched the“Four Free, Six Half”program, which offers preferential land rent rates to all industries for ten years, with free rent for the first four years and half rent for the next six yeas. It is expected that the implementation of new program will help companies saving total NTD 300 million in land rent cost and encourage both local and overseas capital flow to real estate market.

Moreover, the Ministry of Economic Affairs has strengthened industrial parks lease incentive starting May 1, 2002. The 00-66-88 leasing incentive gives firms leasing exemption during the first two years, require 60% of full lease fees during the third and fourth years, 80% of full lease fees during the fifth and sixth years, and payment of full lease fees starting in the seventh year. This has helped NangKang Software Park (phase II) rapidly achieve the goal of 95 % occupancy rate after starting leasing and further facilitate Taiwan’s manufacturing development.

The last but not the least, the Taiwan cabinet has recently announced a big-spending government urban renewal plan, which will redevelop 50 urban areas mainly at Taipei and Kaohsiung’s premium sections and is anticipated to create some 105,000 jobs with estimated NTD 380 billion in business opportunities to attract foreign and domestic capital.The low prime interest rate policy also accounts for a major boost in Taiwan’s property market. Meanwhile, Taiwan’s average property yield is about 5 %, which is quite steady, however, the property price is view as being undervalued compared to other Asia Pacific countries such as China, Singapore, Hong Kong and Japan. This has attracted capital inflow by domestic and foreign investors going overweight to Taiwan’s real estate, for the reason of low cost of the capital and future rental appreciation .

According to historical data on commercial property transactions of each case over NT $ 100 Million, the investment amount is at double y-o-y growth in first half of 2007 and totaled up to NTD 52 .2 Billion. The foreign investments accounted for 30% of transactions in 2006 and are expected to increase over the year 2007.

Overall, Taiwan’s property market is expected to continue prospering, propelled by the strong property performance, government incentives and better market transparency as more institutional investors emerging to the market..

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Contact Information

Charles Huang, CCIM Director | Investment Sales Colliers International Ltd Taiwan Branch (T) 02 2719 6006 (F) 02 2545 0048 Charles.Huang@colliers.com

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