Taiwan Real Estate Flourishes
ANTICIPATION THAT a wave of cash from mainland China will eventually reach Taiwan is helping to turn its real estate into a hot property.
Markets in Taiwan, one of Asia's worst laggards as an investment destination in recent years, were livened up by the Nationalist Party's victory in the March 22 presidential election. On May 20, winner Ma Ying-jeou will be inaugurated, succeeding Chen Shui-bian of the Democratic Progressive Party.
During Mr. Chen's eight-year tenure, Taiwan's benchmark stock index barely budged, even as Hong Kong's shot up 75% and Shanghai's doubled. Right after Mr. Ma's victory, Taiwan's index shot up nearly 10% above where it was shortly before the vote, but after some cooling it's now 4.6% higher than on election day.
That's nothing compared with property prices.
Billy Yen, general manager for property brokerage DTZ Taiwan, estimates home prices have risen as much as 30% since the voting. And he thinks that by the end of 2008, prices could be 60% higher than they were March 22.
Hong Van, managing director of Taiwan for CB Richard Ellis, says high-end apartments in the Taipei suburbs have risen more than 50% since before the election, to above NT$1.5 million (US$49,259) per 'ping,' or about US$1,369 a square foot. (A ping is equal to about 36 square feet.)
The sharp change in sentiment is rooted in Mr. Ma's pledge to open Taiwan's property market to Chinese investors as part of a broader effort to more closely tie the economies of the mainland and Taiwan. Under Mr. Chen, Taiwan adopted an isolationist stance that sent the Taiwanese property market into a slumber.
Since Mr. Ma's victory, DTZ's Mr. Yen has been meeting potential investors in Beijing, Shanghai and Hong Kong, who, like him, read it as a turning point for Taiwan's economy. In the highest-profile reflection of the new optimism, nine mainland tycoons -- including power couple Pan Shiyi and Zhang Xin of Soho China and Li Silian of Guangzhou R&F -- were trailed by camera teams as they visited sites in Taipei and Taichung.
Sentiment had been 'pretty negative' on the domestic residential market, and now it's 'very strong and positive,' says Daniel Hsiao, a Taipei-based property analyst with Taiwan Ratings Corp. He expects large numbers of Taiwanese businessmen who have moved to mainland China in recent years to seek luxury residences back home.
During Mr. Chen's tenure, some investors stayed out of Taiwan property fearing money would be difficult to pull out. Now, Mr. Ma is pledging to allow free capital flows.
The timing could be tailor made for cash-rich mainland Chinese eager to diversify their assets amid a continuing campaign by Beijing to tamp down its domestic property market. 'There is an overflow of investment dollars in China, and it's happening just as Taiwan is opening up,' DTZ's Mr. Yen says.
Local Taiwanese families that have hoarded cash in recent years while avoiding the investment market are another potentially big source of funds. Sharon Lam, an economist with Morgan Stanley, estimated last month that Taiwan's 'household cash position' -- money in bank deposits plus household cash -- is almost 200% of gross domestic product. That's the highest percentage in Asia, she noted.
Taiwan's property markets have underperformed the rest of the region for the better part of a decade. High-end home prices per square foot in Taipei now cost one-third to one-half of those in Hong Kong.
Shares of many Taiwan developers have jumped this year and -- in some recent cases -- have then fallen. Citi Investment Research changed property giant Cathay Real Estate Development to a 'sell' from a 'buy' last month, arguing that the stock had surged too much too quickly. It said the company's swift sales of flats in the first quarter, ahead of the election, also leaves Cathay needing more land, which will be costly in the 'current hot environment.'
On April 14, the stock was at NT$30, compared with NT$15.10 at the end of 2007. On Wednesday, it closed at NT$24.45, still 62% up for the year. The Taipei market was closed Thursday for a holiday.
Another giant, Chong Hong Construction, which focuses on higher-end homebuyers, has seen its shares soar to NT$110 April 17 from NT$53.90 at the start of the year. On Wednesday, the stock closed at NT$94.
If roadblocks scuttle some of President-elect Ma's proposed policies, particularly those requiring a breakthrough in Beijing-Taipei relations, Taiwan's current property-price boom could resemble a bubble. The mainland and Taiwan still lack a banking treaty, for instance, making credit checks and collateral enforcement nearly impossible.
Some market observers are already warning of post-election overexuberance. Andre Chang, a property analyst with Citi Investment Research in Taipei, warns of a potential bubble forming as mass-market buyers, who need homes to remain affordable, begin to 'reach a stretched level.'
In the medium term, top-grade office space in Taipei might be an attractive sector for property investors. Office rentals in central Taipei fell after Mr. Chen became president in 2000 as business sentiment waned. During his tenure, rents have risen about one-third, most of that in the past year or two, according to CBRE's Mr. Van.
Now, as Taiwanese businesses expand and Taipei becomes a more attractive home for multinational corporations, office space is expected to be in bigger demand. Vacancies have now dropped to a five-year low of 4% in the city center, when office space in the Taipei 101 tower, currently the world's tallest building, is excluded.
Over the next one to two years, CBRE's Mr. Van says, office rentals should go up as more companies need space. Rates for some high-end offices, he says, could 'easily by Christmas' reach NT$4,000 per ping -- about US$3.60 per square foot -- 'which is not anything we've ever seen in the history of this market.'
With office rents likely to rise, real-estate investment trusts could be good options, some analysts say.
房地产经纪商戴德梁行台湾(DTZ Taiwan)总经理颜炳立(Billy Yen)估计，自大选投票以来，住房价格的上涨幅度高达30%。而且，他认为，到2008年底，住房价格较3月22日可能会上涨60%。
世邦魏理仕(CB Richard Ellis)台湾分公司的董事总经理云惟鸿(Hong Van)说，台北郊区的高端公寓价格较大选前已经上涨了50%以上，目前的价格大约是每坪新台币150万元（合49,259美元）以上，相当于每平方英尺1,369美元左右。（一坪约等于36平方英尺。）
自马英九赢得总统大选以来，戴德梁行的颜炳立已经和来自北京、上海及香港的潜在投资者进行了会面。和颜炳立一样，这些投资者将马英九的胜利解读为台湾经济的一个转折点。此外，SOHO中国(Soho China)的潘石屹和张欣夫妇以及广州富力地产(Guangzhou R&F)的李思廉等九位中国大陆大亨前往台北和台中访问一些建筑工地时甚至有记者左右相随，这或许是对台湾地产市场焕发的新乐观情绪最为高调的体现。
中华信用评等公司(Taiwan Ratings Corp.)驻台北地产分析师萧黎明(Daniel Hsiao)说，台湾住宅市场的人气之前一直都不太好，而眼下却是非常积极和强劲。他预计，很多在最近几年迁往中国大陆的台湾商人可能会回到岛内购买豪宅。
台湾的家庭近几年来一直避免参与投资市场，因此手中存下了大笔现金，他们也是房地产市场一大潜在资金来源。摩根士丹利(Morgan Stanley)经济学家林琰(Sharon Lam)上个月估计，台湾家庭持有的现金头寸──银行存款和家庭现金的总和──差不多是台湾地区生产总值的2倍。她指出，这是亚洲地区这一指标的最高水平。
一些台湾地产开发商的股票今年大幅上涨，但是最近又出现了回落。花旗投资研究(Citi Investment Research)上个月把对地产巨头国泰建设股份有限公司(Cathay Real Estate Development)的评级从“买进”下调至“卖出”，原因是这只股票短时间内的涨幅过大。花旗投资研究还表示，该公司第一季度（在大选前）的公寓销售速度迅速，这可能会促使它需要更多的土地，而在眼下地产市场升温的状况下，获得土地的成本将变得很高。
另一家地产巨头、以高端住房买家为业务重点的长虹建设股份有限公司(Chong Hong Construction)股价也出现了大幅上涨。4月17日，该股收于新台币110元，今年年初为新台币53.90元。周三，长虹建设收于新台币94元。