Political Factors | Recon Realty Assessment

Real estate developers are expected to roll out new housing projects amounting to NT$1.2 trillion at three major metropolitan regions in northern, central and southern Taiwan in 2012 to warm up the real estate market in the second half following a big slump in 2011.

Realty analysts generally forecast higher presentation of more new housing projects in Taipei and New Taipei City in the north, Taichung City in central Taiwan, and Kaohsiung on the southern part of the island.

They gave the more optimistic business prediction in spite of negative economic developments, including the impact from the prolonged European debt crisis that will almost certainly affect Taiwan’s export trade.

The new regulations concerning the levying of luxury taxes on purchases of luxury goods and speculative real estate transactions adopted in 2011 will be another market damper.

But analysts pointed out there will also be positive factors for the realty market for 2012, including Taiwan’s continuing and steady economic expansion, the stable and low interest rate, the return of more capital held by Taiwan-based businesspeople from abroad, and possible increasing interest in Taiwan properties by the wealthy in mainland China amid intensified business interchanges between Taiwan and China.

Realty developers and construction companies put on the market NT$821 billion worth of new housing projects throughout Taiwan in 2011, representing a drop of 11.7 percent from NT$930 billion in 2010, according to analysts at the My Housing magazine.

Public Discontent

The government and legislators passed new regulations last year to limit realty speculations that caused soaring housing prices, a major source of public discontent.

Many developers also postponed their new projects in view of falling property prices and transactions at major cities, declining stock prices of construction firms on the financial market, and political factors like the new presidential and legislative elections.

But new development projects will be unveiled after political uncertainties settle down in the wake of the Jan. 14 general elections.

Experts believe that more people in need of their own apartments will return and take part in rational property transactions after realizing the government’s crackdown measures have been targeted primarily toward exceptionally large housing units and speculators who had sought quick and high returns in realty investments while lifting the market prices along the way.

Analysts at the My Housing magazine said new housing projects in northern Taiwan will recover and rise back to the level of more than NT$900 billion plus additional development projects valued at around NT$300 billion in central and southern Taiwan.

Lai Cheng-yi, chairman of the Shining Construction Group, pointed out that the integration of resources and upgrading the administrative status of New Taipei City, Taichung City, Tainan City, and Kaohsiung City will significantly enhance the economic and commercial activities in the major metropolitan areas in Taiwan.

Taoyuan County in northern Taiwan will also see the construction of more new apartments this year due to the increasing number of foreign spouses married into local families and the rising demand from newly formed families.

Surge in H2

Lai expects new apartments and houses receiving construction licenses will go up to 90,000 units in 2012.

Most analysts believe that the number of housing starts and purchases of new apartments will resurge beginning from the second half (H2) of 2012.

Demand from mainland Chinese and overseas Chinese from Hong Kong and Singapore will also rise as more of them have personally visited Taiwan and hold positive views on the local living environment. Further developments of relations across the Taiwan Strait will also contribute to the resurgence.

The return of more property buyers on improved transport networks will help reduce the inventory of housing units accumulated in areas like Tamsui, Linkuo, and Sanxia in New Taipei City and the areas of Chungli and Nankan Interchange in Taoyuan, according to the analysts.

Most residents in Taiwan still generally hold the traditional concept of purchasing apartments for their own use while the interest rate on mortgage loans remains low as an effective way of offsetting the impact from inflation over the long term, the analysts said.

Second-hand apartment transactions will also increase in the metropolitan regions that generally offer better job opportunities, they added.

Other sources of strength for the realty industry include the government’s plan to increase low-cost housing units for low-income families and continuing urban renewal projects for older communities.

http://www.chinapost.com.tw/

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OTTAWA—In a decision that will no doubt be welcomed by city councils facing tough budgeting decisions, Canada’s high court has rejected a bid by a B.C. paper company to reduce its municipal tax bill.

Municipal councils don’t have “carte blanche” to tax their citizens, but the power of courts to overturn tax rates set by these councils is very narrow, the Supreme Court of Canada says.

Catalyst Paper Corp. had fought to overturn the municipal taxes imposed by North Cowichan council. It is the biggest industry in the Vancouver Island municipality.

In rejecting Catalyst’s appeal, seven high court judges reinforced the broad power of elected officials to balance business and residential taxes as they see fit, according to provincial laws.

“Municipal councils have extensive latitude in what factors they may consider in passing a bylaw,” wrote Chief Justice Beverley McLachlin for the unanimous panel.

She said councillors “may consider objective factors,” such as how much water or other municipal services are consumed by a business. “But they may also consider broader social, economic and political factors that are relevant to the electorate.”

The decision says councillors, not courts, are in the best position to weigh all the competing considerations and they deserve deference by judges.

Catalyst, the largest manufacturer of specialty paper products in western North America, had argued it bears too big a load of the overall municipal tax burden.

According to local news reports, Catalyst’s 2010 tax bill was $5.5 million and its 2011 bill was about $5.4 million. The company is also facing global debt and market losses that puts about 500 local jobs at risk.

As the population on the southeastern shore of Vancouver Island has grown, subdivisions have sprung up, and so has the need for roads, water lines, schools, hospitals and other municipal services.

Residential property values have soared, while the value of the Catalyst property has remained stable.

However, the municipality, not wishing to hit long-term fixed-income residents with massive tax hikes, was for years increasing the relative tax burden on Catalyst to one of the highest in the province.

In court, Catalyst argued it has its own sewer and water systems and its own deep-sea port, and its operation has been losing money.

It says it’s footing a “grossly disproportionate” part of the property tax bill and cannot just pick up operations and move.

“Its choices are to stay and pay or to close the mill,” said a court summary of Catalyst’s arguments.

Since 2003, the town has reduced the rate on Catalyst slightly. In 2007, Catalyst paid 48 per cent of the total municipal tax burden. By the time the case was heard, that was down to 37 per cent, but not as much as Catalyst demanded. It argued taxes should be related to municipal services consumed.

The company’s challenge of a municipality’s right to pass what it called an “unreasonable” bylaw met with defeat B.C’s trial and appellate courts.

In agreeing with those lower rulings, the Supreme Court’s decision distinguished between taxes and “fees” for services.

It said the delivery of services could be “a factor” but it is up to a council to weigh against competing considerations.

The high court said the council, unlike a court, is not obliged to give reasons for taxation decisions.

http://www.thestar.com/

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Real estate market may rebound in second half of 2012: analysts

Canada’s Supreme Court upholds municipal taxing powers