Are you bearish on Taiwan’s real estate market?Foreign investment in real estate has dropped by 35% annually, the second lowest level | Real estate investment | Real estate market

Amendments to the Equalization Land Rights Ordinance came into effect last year, restricting private legal entities from purchasing residential properties and impacting foreign investors’ willingness to invest in real estate in Taiwan. Housing and commercial institutions compiled data from the Ministry of Economic Affairs and found that the amount of overseas Chinese and foreigners approved to invest in Taiwan’s real estate industry in 2023 was about US$238 million, a decrease of about 35% from 2022 and the second lowest since 2012.

Xu Jiaxin, executive director of the Housing and Urban-Rural Real Estate Enterprise Research Office, analyzed that they were worried about foreign capital coming to Taiwan through third-party companies to speculate in real estate. The government had previously imposed heavy taxes on foreigners through the merger of real estate and land. Last year, due to the amendment of the Equalization Land Rights Act, private legal entities were restricted from purchasing. For residential properties, various regulatory restrictions and a limited number of domestic projects have made foreign investment attitudes more conservative.

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 The remaining US$480 million in foreign investment.

However, when the unified real estate and land tax was officially launched in 2016, the investment amount dropped sharply to US$317 million. It did not rebound until 2017, when the investment amount reached a new high of US$717 million. After that, it continued to decline year after year until the real estate market recovered during the epidemic. In 2021 The amount of foreign investment hit a record high of US$653 million.

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.

Xu Jiaxin said that the global economy will be unstable in 2022 and 2023, and countries will gradually enter a cycle of interest rate hikes, adding to the uncertainty of the real estate market. Affected by policies, the domestic real estate market will see a sharp decline in transaction volume 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. Current regulations The lockdown period has exacerbated the problem of lack of housing, and the pace of investment by foreign companies has also slowed down.

In addition to factors such as the political and economic situation, Lai Zhichang, public relations director of our housing planning and research office, analyzed that many foreign investors are overseas Chinese. They 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, the average last year The land rights regulations have been revised 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.