Taipei airport facelift to boost nearby property prices

Analysts expect 30% rise after renovation, rail link to capital

Taiwan property prices may rise at least 30 per cent near the island’s main airport once the government renovates the terminals and completes a rail link to the capital city, according to CLSA Ltd.

‘This will be a big boost,’ Tayher Lim, a property analyst at CLSA, said last Friday. ‘Once the train is ready, a 30 per cent surge in housing prices won’t be a problem.’

Remodelling of Taoyuan International Airport’s first terminal will be completed by August next year, Transportation and Communications Deputy Minister Yeh Kuang-shih said in a phone interview. A new rapid transit system to the airport will be ready between 2014 and 2015, Mr Yeh added.

The government has budgeted NT$293.7 billion (S$12.9 billion) over eight years to overhaul airport infrastructure including roads to boost the economy. The upgrade will help absorb surging traffic amid improved relations with the Chinese mainland, the largest exporter to the island.

The Taoyuan airport overhaul was among President Ma Ying-jeou’s election campaign pledges before taking office in May 2008. His 12 ‘Love Taiwan’ infrastructure projects will cost an estimated NT$3.99 trillion over eight years.

The government is hoping for a turnaround in its economy, which shrank 1.29 per cent in the third quarter last year.

Taiwan and China resumed direct flights, shipping and postal services in December 2008, ending a ban that had been in place since Chiang Kai-shek’s Kuomintang, or Nationalists, fled to the island after being defeated by Mao Zedong’s Communists in 1949. Direct flights operated exclusively by Taiwanese and Chinese carriers more than doubled to 270 a week in December from last August.

China halted planned military exchanges with the United States over the weekend and said it would punish companies involved in a Pentagon plan to sell weapons worth US$6.4 billion to Taiwan. The plan ‘harms China’s peaceful reunification efforts’, according to a statement on the website of the Foreign Ministry in China, which quoted Vice-Foreign Minister He Yafei.

The Beijing-based Taiwan Affairs Office of the State Council also said the planned US arm sales would ‘instigate the pro-independence forces on the island and hamper the peaceful development of cross-strait relations’.

Ties are at their warmest since a civil war six decades ago, after Taiwan’s President Ma took office almost two years ago and abandoned his predecessor’s pro-independence stance.

The investments at Taiwan airport will boost the property market in the ‘long term’, said Peter Tseng, a manager at Sinyi Realty Co, Taiwan’s biggest real estate broker. ‘We can see a surge after the entire project is completed,’ he said.

The train system now under construction will ease congestion and pare travelling times, while an aviation park will offer businesses a free-trade zone, including tax breaks and exemptions, Deputy Minister Yeh said.

‘There’s limited land around that area, so the demand will cause land prices to spike,’ Monika Yang, who helps oversee US$2 billion at Hamon Asset Management Ltd in Hong Kong, said by telephone in Hong Kong. ‘Business people would also want to buy apartments near the airport to facilitate their travel.’

Tourist arrivals from China surged more than threefold last year to 970,000, and the tourism bureau is expecting 1.1 million this year, Wayne Liu, a spokesman for Taiwan’s tourism bureau, said in a phone interview in Taipei. A total of 4.8 million overseas visitors are expected this year, from 4.4 million last year, Mr Liu said.

The airport’s first ‘facelift’ in more than 20 years has become more urgent as the government aims to double the total number of users to more than 50 million when the project is completed, from the 20 million now, said Mr Yeh.

‘The first impression a foreigner gets when he comes to Taiwan will be the airport,’ Hamon Asset’s Ms Yang said. ‘Our airport must be one of the oldest in the world. It even has a smell to it. This is not good for Taiwan’s image.’

Source : Business Times – 2 Feb 2010