Fri, Apr 25, 2008 page12

• Property bubble possibility has pundits worried

  ACADEMIC VIEWPOINT A professor from National Chengchi University said he ignored a warning letter not to talk about Taipei City’s overheated prices

  • By Jerry Lin and Joyce Huang / STAFF REPORTERS
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  Pundits said yesterday that they were concerned about an emerging property bubble in the Taipei market, as 38 percent of property prices were overestimated in the first quarter of the year.

  “Although [current overestimated housing prices are] not as high as last time, they have continued to surge in a very short period of time. As a result, I conclude that a property bubble is emerging in Taipei,” Chang Chin-oh (張金鶚), a professor of land economics at National Chengchi University, told a media briefing.

  The last time Taipei witnessed a property bubble was between 1987 and 1991, when as much as 50 percent of housing prices were overestimated, Chang said.

  The market has been entering another boom since the fourth quarter of 2005, as housing prices have increased by nearly 50 percent since, while personal incomes have risen by just by 2 percent, the university’s report said.

  Chang has repeatedly warned that the property market was getting too hot and that prices should return to reasonable levels in the wake of the March 22 presidential election.

  THREAT

  He said yesterday that he had received a threatening letter recently warning him to shut up or be attacked by Chinese hitmen.

  He said yesterday that he decided to host the press conference as scheduled and would continue to speak out because the public need to know the state of the market based on academic research, not what the developers wanted people to hear.

  Meanwhile, other researchers said they were more concerned about overheated pre-sale housing prices than skyrocketing high-end property prices.

  “It is surprising to see a 30-year-old apartment in downtown Taipei with a selling price of NT$500,000 [US$16,500] per ping,” Hua Ching-chun (花敬群), an associate professor of finance and banking at Hsuan Chuang University, said yesterday.

  “It has become nearly impossible for average middle to high-income households to buy properties in Taipei,” Hua said.

  CHINESE INVESTMENT

  When asked about the government’s plan to ease restrictions on Chinese investment in the local commercial property market, Chang said the most important question remains whether the plan would help increase domestic demand, because the current problem stems from a lack of demand.

  “It is not an appropriate time to allow such an investment. The government needs to carefully analyze [whether to ease restrictions],” he said.

  A group of Chinese property developers and businesspeople are currently visiting Taiwan, raising concerns that the entry of Chinese investment in the real estate market will cause residential prices to skyrocket.

  Potential buyers from Hong Kong and China have expressed strong enthusiasm in Agora Garden (亞太會館), a hotel in Taipei City’s Xinyi District (信義), Billy Yen (顏炳立), general manager of real-estate consultant DTZ (戴德梁行), said on the sidelines of a pre-auction presentation yesterday.

  AGORA GARDEN AUCTION

  Agora Garden in scheduled to be auctioned on May 30.

  Yen said Agora’s owner has set a minimum bid on the property, which is sure to exceed its current starting price of NT$14.9 billion.

  “If bidders fail to meet the minimum selling price, we would advise the owner to call the deal off and enter [another round of] direct price negotiations [with the highest bidder],” he said.

  If potential buyers can foresee prices of yet-to-be-built super luxury homes in the upscale Xinyi District, which are likely to average NT$4 million per ping, a three-digit closing price will still be a bargain, Yen said.

  He estimates that sales of the super luxury housing project will reach NT$41.3 billion — at an average NT$4 million per ping and NT$5 million per parking slot — which may generate a return of between 50 percent and 212 percent, pending on interest costs for bank loans.

  Auction applications for potential buyers will be available from next Thursday. Interested parties will have to put down a deposit of NT$500 million three days before the auction, the organizer said.

  The highest bidder at the auction will be required to sign a contract immediately to close the deal, or relinquish his rights to the bidders with the second or third-highest bid, DTZ’s lawyer said.
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