In addition to the new floor-area ratio, which will take effect next year at the earliest, the government announced a range of other steps intended to facilitate the urban development of Taiwan. The Ministry of the Interior and the Council for Economic Planning and Development, for example, will cooperate with private companies, and perhaps even provide funds, to implement a variety of projects to rejuvenate a number of urban areas around the country.
The government is also accelerating the establishment of an urban-regeneration company to facilitate the implementation of urban-renewal projects. According to CEPD Deputy Minister Chang Chin-shen, the government has committed US$153.8 million to the new company, of which at least US$61.5 million will come from the National Development Fund. The government's stake will be kept below 50 percent, so that the company can operate as a private company. And to prevent the government from being accused of unduly favoring one industry over another, developers will be required to pay up to 40 percent of their increased profits back to the government.
Speaking at a news conference after the Cabinet meeting Nov. 14, Minister of the Interior Lee Yi-yang said that although the statute governing urban rejuvenation has been in place for nine years, only 165 development projects have been carried out nationwide. Lee attributed the lukewarm response to a lack of incentives.
Local governments are authorized by the statute to enact their own measures to boost urban development under the general principles set by the central government. "But even with this provision, local governments, because of their bureaucratic rigidity, have failed to come up with incentive schemes to drive urban renewal. In response, our decision today sweetens the pot by expanding the scope of incentives to boost such projects," Lee said, predicting that the new floor-area ratio will help increase the number of renewal projects by 200 over the next five-year period, attracting private investments worth over US$30 billion and generating US$61.5 billion for the benefit of the economy.
This latest announcement from the Cabinet is seen as great news for companies involved in the fields of design, architecture and real estate. Although a small section of the industry has expressed concern over the fact that a higher floor-area ratio might result in an abundance of unusable floor space or even cause the skylines of Taiwan's cities to deteriorate, most agreed the changes will encourage builders to invest in new projects and help to improve the country's urban landscapes.
K.S. Wang, chairman of the Federation of Real Estate Development Association of the Republic of China, was among the majority that felt the changes would indeed be beneficial. He said Nov. 22 that the new policy would enhance the speed of urban-renovation projects and create business opportunities worth billions of U.S. dollars. "It is the most attractive and lucrative incentive to real-estate companies since the initial implementation of the floor-area ratio 25 years ago," he stressed.
Su Chi-rong, director of the Sinyi Real Estate Inc.'s Project Research Division, agreed with Wang. He said Nov. 23 that the floor-area ratio for urban renewable projects involving old houses is now set at 450 percent, but will be raised to 600 percent under the new regulation. This means that six pings--one ping equals 36 square feet--of space can be built on one ping of land, rather than the existing 4.5 pings, an increase of 33 percent, he explained. As a result, if a gentrification project targets 150 houses, it can now be expanded to affect 200 houses, allowing developers to offer significantly better deals to owners of old houses who wish to rebuild their properties. "The potential profits are very tempting indeed," Su said Nov. 21. "I expect the change will greatly speed up the renewal of urban residential communities in Taipei's Datong, Wanhua and Jhongjheng districts," he added.
In addition to proposals intended to revamp certain areas, other "strategic" construction projects include building within a 400-meter radius of high-speed rail, railway, and subway stations; constructing on waterfront areas or in other areas in the vicinity of harbors; and allowing construction-renewal schemes necessitated by major national or municipal construction projects.
Write to Liu King-pong at kpliu@mail.gio.gov.tw