Taiwan’s land, housing and hotel prices might need to fall 10 percent this year to spur buying interest, as an economic slowdown, monetary tightening and unfavorable legislation bode ill for transactions, Cushman & Wakefield Taiwan said yesterday.
“The property market is heading for a downturn in both transactions and prices, although some developers seek to push prices higher with their own capital,” Cushman & Wakefield Taiwan managing director Billy Yen (顏炳立) said.
The strategy would prove to be overreaching and impractical in light of a global economic slowdown and monetary tightening, Yen told a media briefing.
Photo: CNA
A liquidity-driven property boom plateaued in the first quarter of last year and has since lost steam, in line with interest rate hikes at home and abroad, he said, adding that the market cannot stay dynamic in the absence of sizeable capital injection.
Commercial property transactions shrank 17.6 percent year-on-year to NT$125.8 billion (US$4.1 billion) last year, while land deals plunged more than 40 percent to NT$171.8 billion, the property consultancy said.
Investment purposes drove 55 percent of commercial property transfers, the highest ratio in the past five years and outranking self-occupancy needs, it said.
Monetary tightening is dampening investment interest and bills that would ban transfers of presale housing contracts and subject unlisted companies to obtain regulatory approval before buying real estate could trigger panic selloffs and price corrections, Yen said.
Profits from property transactions on the part of companies are subject to income taxes of 20 percent, while individuals might pay up to 40 percent, depending on their income level. The gap has driven investors to set up companies to reduce taxes when trading real estate.
Yen said prices for commercial and residential properties would need to drop 10 percent to motivate potential buyers.
Hotels in popular locations have sought to increase their value through urban renewal, but properties in second-tier locations did not benefit and should display more pricing flexibility, Yen said.
Prices for storefronts would need to fall 20 percent to attract buyers, as physical stores are facing sharp competition from e-commerce firms, and rising operation and personnel costs, he said.
Yen said a 10 percent price correction would also apply to luxury housing units to motivate owners of multiple units to invest in them to hedge against inflation and investment risks.
“Players who do not have deep pockets better play safe in bad times,” Yen said.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
RSS