Luxury Real Estate in Taiwan Suffering from Global Financial Crisis

Taipei

The vice president of Taiwan Realty Co, Andy Hsieh said today, that deals on luxury homes in Taipei’s Xinyi and Da-an districts have “frozen to ice” as existing owners are refusing to budge on price and buyers are reluctant to increase their offers because of uncertainty in the market. He also said that the company had seen a mild increases in sales volume in suburban areas such as Taipei County, Taoyuan City and Taoyuan County, where prices had already dropped, and there was more room for negotiation.

The Daan and Xinyi districts rank as the top two districts in Taipei in terms of price for luxury real estate, according to a survey conducted by Century 21 last year. Prices for luxury homes in Taiwan rose an average of 34% in 2007 – the fifth-highest growth of its kind in the world – and are now understandably under pressure. Uncertainty about the financial crisis’ fallout will continue to put buyers off.

Analysts in Taiwan are suggesting local real-estate brokerage firms may suffer closures over the next two months after completed property deals saw a 35% decline. The latest statistics from the Ministry of the Interior showed that the number of property transfers declined to 26,527 in August from 40,839 in May.

Kaohsiung City, Taipei City and Taichung City saw some of the biggest drops in August – 45.9%, 42.7% and 41.4% respectively.

Jeffrey Huang, an assistant manager at Evertrust Rehouse Co’s research and development department said, “If the slowdown of  sales is prolonged, which is highly likely by year’s end, smaller and less competitive realtors and even land developers may have a hard time operating,”

Huang said that the sector is appalled to find the unexpected acceleration of such a slowdown, the likes of which hasn’t been seen since the earthquake of Sept. 21, 1999. Like all the other governments around the world, Taiwan is propping up the local markets with an infusion of capital. The National Development Fund, a state owned venture capital fund was given another NT$1 Trillion (US$ 30 billion) this month.

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