Taipei University City madness?

Bored out of my skull, I decided to stop by and look at the Taipei University new City, which is more or less finished, and is between Sanxia and the freeway #3.

I was flabbergasted. They have some 20,000-30,000 residential units there, mostly very high rise, and the area itself is well laid out, however wonder what the 100,000 people which is supposed to live where will do on weekends.

There were the beginnings of an urban life there with cafees etc etc etc. That said, not all can be sold, and wonder where they get the people to live in the place.

It looks fairly OK, however how much have they managed to sell of it, and who would move out of say Taipei to what’s a hugh block of flats next to a freeway?

Do any of you know?

Seeking those renminbis

Actually not really. The problem is easy money within Taiwan and the fact construction companies only need to sell about 20-30% of units to make a profit. It’s not a coincidence that the biggest buyers of advertising within Taiwan are construction companies.

True, but I’m talking long-term.

Either way, it’s clear that they don’t expect many people to live in them.

A lot of it looked habited, but I did not ask the guards. Should have.

I wonder about long term as a lot of companies fold after a few years. It’s but one reason no one was ever held accountable for the collapse of buildings after 921.

The whole pre-sale market here is a contributing factor. Most advanced countries don’t allow much of it as it skews the market and produces an inferior product as companies know it will be super hard to sue them after the fact if they’ve made a shoddy building without all those fancy facilities they promised.

Yes Im in two minds about the area. On one hand there are 100s of apartment blocks and not much to do. On the other hand it’s pretty nicely laid out, close to the freeway for easy access to Taipei and the airport and other places, and they will get an MRT link. It’s still lacking in shops and diversity , of course it will be a bit dull compared to some other places (could be a good thing) and the lack of youth coming through would indicate to me it’s future development will stall especially if prices come down in the city proper.

A fair chunk of the area has been built by the Farglory Group, which seems fairly huge. Wonder if they will go down.

Interesting, their logo, which looks like a rip-off of a US 1970’s logo is all over the place, even the lampposts and manhole covers.

Regarding the area again, well, well laid out, however the freeway #3 can be a bit iffy when going into Taipei in the morning, so the actual commute time by car would be up toward one hour, I would think. The MRT, they are supposed to begin building in 2014, however I would now know if the budget has been found, they have issues securing funding for the Wanda-Zhonghe-Shulin line already, the more marginal line to Yingge and Sanxia might be further off.

I must admit that I am very surprised that the developers break even at 30% units sold, wonder what they do with the unsold ones in the end. Hive them off on the cheap, when all the market can bear has been sold off at regular rates?

Those big buildings and communities need their management fees paid, if say Farglory parks nearly half of the units in an independent company, which goes bust, then well… No management fees, no guards, no upkeep, and the usual slummy appearance of the buildings will make itself apparent very fast.

It seemed to me that at least some of the buildings were washed once in a while, so that at least keeps the area looking more or less OK. Grass was sprouting and rust was peeking out here and there around the Farglory Art Road. (AKA Xueqin Road).

A lot of them are weekend homes or investment properties for people who don’t live there. A lot of well off Taiwanese own apartments they never live, visit nor rent out. It’s a relatively reliable store of investment in Taiwan currently. The house I live in had no one living in it for 15-20 years. Another house that was recently remodeled in my neighborhood also had no one living in it for a similar period of time. A beautiful house behind mine was freshly built and I’ve seen the owners maybe 3 times in 2+ years.

One thing that you can definitely count on: There tends to be very little rationality in the property market, anywhere.

by the way, if you like the outdoors, there are tons of stuff to do living close to SanXia.

Well, I can see the charm of living near mountains and the nature, I live right now some 500 meters away from where the mountains start, as it were. I would think that the Taiwanese in general would look at it in a different light.

OK, as a store of value, real estate might make sense, if you are unfamiliar with other types of investment, and you live in a place where the supply is limited, and the demand is increasing due to immigration or lots of childbirths, combined with a stable and growing economy. Also, the last 20 years have seen an increase in this kind of value store behavior.

That is not the case here, though.In Taiwan, places like Danshui, Sanxia, Linkou etc have supply coming out of their bungholes, the population is about to start shrinking, and the economy here is not doing well, and it is next door to a financial disaster waiting to happen. What rescue the Chinese might have been able to offer to the property market here is smoke and mirrors, and it will be apparent when the Chinese miracle starts to unwind.

What is interesting, not just for Sanxia, but also for Taipei etc is how much of this is debt fueled, and what an increase in real interest rates due to QE ending worldwide will mean to the property market here. That is the big danger, something the US demonstrated for us in 2007-2008. With the amount of emply flats, IE 20% of total, what would a financial meltdown in China leading to repatriation of Chinese Funds and a drastic slowing of the economic activity here mean to the local property market?

Well in the end it will come down to whether it it LOOKS like a sound investment or not to get the ‘next fool’ to buy or not.
The next fools will disappear as soon as the market turns or credit costs increase (who wants to leverage up and buy in a dropping market) and it won’t be resurrected for a long time if ever the way population growth is going in North Asia right now.

Crack up boom? I do think Kaoshiung is in a period of catch-up with the North though.
taipeitimes.com/News/biz/arc … 2003567708

Interesting number for Taoyuan County, about 8 billion USD of new developments coming on stream again THIS year.
Taichung has 5 billion USD predicted, and Taipei and Kaoshiung almost 7 billion. And yet what is the rate of new household formation in Taiwan?

I think they are all banking on the Chinese nationals to come in and be the ‘next fool’, that’s a big bet to make in general, especially when you look at the over leveraged property market in China already. Most of Taiwan is simply not an attractive immigration destination for people of means. It’s Chinese speaking, it’s fairly isolated, the economy is not in good shape, education standards aren’t high, it’s bloody hot most of the time. I happen to think it’s a nice enough place but it’s not your standard retirement destination or free trade economic zone like HK or Singapore.

I’m amazed at this article from ‘China’ WantWantTimes- wantchinatimes.com/news-subc … 5&cid=1701

It’s an attractive immigrant destination for people with not much means, but they won’t be buying these empty expensive apartments!

When this will happen seems hard to predict, but they are still building thousands more apartments right now in Taichung, God knows who for! The apartments near the science park I can see maybe some of them will be occupied by higher paid engineers and managers, but otherwise, there simply won’t be demand for all these empty apartments, many of which are too expensive for average people to buy. There are TONNES of cheaper older apartments in the city and this is just going to ensure rent will remain really low here for a very long time. I think cheaper property and continuing cheap rent in the future is a good thing.

Well, one issue is what a burst property bubble will do to the banks here? How heavy are they in residential housing debt, and would any of them be in danger of going down in cause of a fast, sharp and painful deflation of said bubble?

I took the better half there yesterday, after plying her with promises that we would neither buy or rent anything more than a mile away from Taipei 101.

OK, impressions:

  1. Real estate agents swarming like bees, with us being the honey. I would think that there is at least 1,000 flats for sale here and now, excluding whatever the developers are hiving off. It would seem that a lot of them have not even been decorated yet, so the investors are looking to get out, it seems, or the preferential exchange rate period is up.
  2. Starbucks full, apart from that not many people around. Apart from us, the only people walking around outside would be real estate agents, as mentioned earlier lots of them. An Arab bazaar, but no spices, only blocks of concrete.
  3. The people we did see looked like country folks, not city people, IE I think they are sucking away more people from Taoyuan than Taipei.
  4. The Carrefour very full as well. That said, the customers could come from anywhere in the Sanxia/Yingge area, I think.

The febrile selling attempts tells me that the wave must be close to cresting.

The big problem with that area is there’s nothing there. If you go into Sanxia, where are you going to park? There’s nothing where the apartments are. It was quite empty when I left Taipei 5 tears ago and I can’t see it getting any better. There’s stuff in Shulin, but you still have the same parking problem. People who own those apartments have money, but there’s precious little for them to spend it on in that area.

But could you not say the same thing about Linkou, where they have built like madmen recently?

And Danshui, where they are gearing up for it?

Danshui is a nice town, if you stay by the seaside, however the new highrises are literally miles away.

I did see some shops and restaurants there, I must admit, however nowhere near viable as a community yet.

Some of these ‘communities’ will never become communities as they won’t reach critical mass, its the usual developers selling a dream. New Sanxia is a bit better because its close to old Sanxia town which has some shops and markets.
The main problem for all these developments is Taiwan’s demographic crunch. There is just no need for them.

headhoncho you are one of the most insightful posters here when it comes to property. I just don’t get how there are fewer young people needing to buy houses and yet more and more houses going up in rural areas with ever-increasing price tags. Mind boggling.

Now that I’m getting married, people keep asking me when I’m going to buy a house. I always respond in a very bitter tone that without help from my parents (who don’t have the extra cash anyway) it’s utterly unaffordable for me, breaking down the numbers so that they can understand. People still always end with comments like “Nah, it’s not so bad,” or “you can do it if you save up first.” Out of touch with reality in the housing market, they are.

But they are right. Do not buy now, rent. Renting is so much cheaper than buying right now.

Then wait for the property market to take a beating which it will, as the economic fundamentals are against it.Then you buy, at less than half price.

So, yes they are right, save now and wait.

I think there no doubt that the real estate market is a bubble. The big question is what will make it pop.

Interest rates are still low, but it seems that the interest rate will not increase out of fear that this will trigger a massive collapse. But doesn’t this mean there is a huge risk of banks collapsing when the bubble bursts? How many % of the loans will become bad loans? Will the TW government bail out the collapsing banks?