The property market in Taipei has not seen new large luxury home projects so far this year as developers shun such products, which remain a tough sell despite a recovery in property transactions, the Chinese-language Housing Monthly (住展雜誌) has reported.
The magazine defines luxury homes as apartments larger than 100 ping (330m2) that appeal to wealthy buyers.
Luxury projects — which last year totaled NT$85 billion (US$2.75 billion at the current exchange rate), the highest since a peak in 2013 — were nowhere to be found in the first quarter of this year and the situation might persist through the rest of the year if Taozhu Garden (陶朱隱園) in the Xinyi District (信義) does not join the market, Housing Monthly research manager Ho Shih-chang (何世昌) said.
Luxury home projects approached NT$90 billion in 2013, but plunged to NT$35 billion in 2014 following a spate of government measures to cool the property market, Ho said.
Developers shunned upscale home projects from 2015 to 2017, but regained confidence last year, with projects in Daan (大安), Zhongshan (中山) and Xinyi districts receiving a boost thanks to their convenient location and expectations of capital repatriation, Ho said.
Luxury homes serve as a critical confidence barometer on the part of developers, the analyst said.
While the government has offered tax incentives to encourage capital repatriation, developers have refrained from launching new luxury home projects, Ho said, adding that projects already in the pipeline for some time have yet to enter the market.
Political uncertainty due to next year’s presidential election might drive developers to the sidelines as election campaigns heat up in the second half of this year, he said.
Developers might also want to digest unsold projects first to ease selling pressure and lend support to prices, Ho said.
New luxury home projects might have difficulty competing with unsold units due to a lack of land supply in popular locations, Ho said, adding that most unsold luxury homes are built on plots acquired years ago.
In addition, developers prefer to build small apartments because of their lower funding threshold, and buyers can buy two units and convert them into one large apartment if they want more space, Ho said.
The absence of new luxury homes is favorable for unsold units, making them more competitive and attractive, he said, adding that their transactions might pick up if sellers reduce prices a bit.