Are you bearish on Taiwan’s real estate market?The amount of foreign investment in real estate hit an 11-year low

Are you bearish on Taiwan’s real estate market? Housing and commercial institutions compiled data from the Ministry of Economic Affairs and found that the amount of real estate investment approved by overseas Chinese and foreigners in Taiwan in 2023 was approximately US$238 million, a decrease of approximately 35% from 2022, second only to the 2012 level, and a new low in the past 11 years.

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In the second half of last year, the government introduced an amendment to the Equalization Land Rights Ordinance, which restricted the purchase of residential properties by private entities and affected the willingness of foreign investors to invest in real estate in Taiwan. Xu Jiaxin, executive director of the Housing and Urban-Rural Real Estate Planning and Research Office, analyzed that he was worried that foreign capital from third-party companies would come to Taiwan to speculate in real estate. The government had previously imposed heavy taxes on foreigners during the merger of real estate and land. Last year, due to the revision of the Equalization Land Rights Ordinance, restrictions were imposed on foreigners. Various legal restrictions on the purchase of residences by private entities, coupled with the limited number of domestic cases, have made foreign investment attitudes become more conservative.

Due to political and economic instability at home and abroad, overseas investment in Taiwan has declined.

Housing and commercial institutions observed relevant statistics from the Ministry of Economic Affairs and found that in 2012, because the real estate market was at a low level, the amount of overseas Chinese and foreigners approved to invest in real estate in Taiwan hit a record low of US$175 million. From 2013 to 2015, the real estate market reversed and entered a bull market, attracting more than There was a remaining foreign investment of US$480 million. However, in 2016, the unified real estate and land tax was officially implemented, and the investment amount dropped sharply to US$317 million. It was not until 2017 that there was a rebound, with the investment amount reaching a new high of US$717 million. After that, it continued to decline for years until the housing market recovered during the epidemic. In 2021, the amount of foreign investment hit a record high of US$653 million.

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However, as the global situation fluctuates, there will be two consecutive years of decline in 2022 and 2023. In 2022, the amount of overseas Chinese and foreigners approved to invest in Taiwan’s real estate industry will be approximately US$366 million, with an annual decrease rate of 44%. By 2023, the investment amount will be approximately US$238 million, a decrease of approximately 35% from the same period in 2022. This is also the highest level since 2012. Second lowest.

Due to interference from policy factors, the amount of overseas investment in real estate has declined in consecutive years.

Xu Jiaxin said that in 2022 and 2023, due to the impact of the international situation, the global economy will be unstable, and countries will gradually enter a cycle of interest rate hikes, adding to the uncertainty of the real estate market. The domestic real estate market situation is affected by policies, with transaction volume falling sharply in 2023. It also coincides with the 2024 election, and geopolitics has also touched the sensitive nerves of investors. In addition, most real estate properties with long-term investment benefits in Taiwan are held by a single owner. The current regulations impose a lock-down period on properties, exacerbating the problem of lack of records and causing a slowdown in investment by foreign companies.

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In addition to factors such as the political and economic situation, Lai Zhichang, the public relations director of our housing planning and research office, analyzed that many foreign investors are overseas Chinese, who are included in the high-tax rate group under the unified real estate and land tax system and are subject to heavy taxes. At the same time, last year The “Equal Land Rights Ordinance” was amended to regulate the purchase of residential properties by private entities. Various factors have made overseas buyers more conservative in purchasing real estate. However, in recent years, many Taiwanese businessmen have returned, and family offices established in response to the needs of high-net-worth groups have also become a new trend. Faced with political and economic turmoil and an uncertain future, the real estate industry will enter a new situation.

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• Yahoo Finance special correspondent Ye Yiru: With more than 20 years of experience in mainstream financial media, from the Web1.0 bubble in 2000 to the Meta Yuanverse Web3.0, he has witnessed the rise and fall of Taiwan’s large and small business groups, and has experienced five international financial crises. We believe that finance is life and is everywhere. No matter how difficult financial knowledge is, we should explain it in a simple way. Everyone, young and old, should manage money. If you don’t manage money, money will not care about you.