Direct Air Links Are The Key Taiwan, although clearly a political conundrum for most Western investors, need not be a mystery in terms of real estate.  With real estate all over Taiwan either overpriced (as in Taipei) or in the doldrums (as in Kaohsiung and Tainan) and with the island’s future a political question mark, few places in Taiwan really have what would make a savvy Western buyer open his or her eyes to the enormous potential for future long term profits that one can find in the “diamond-in-the-rough” areas of Taitung City and County.  Evaluating the wisdom of acquiring property in Taitung at the current remarkable bargains requires one to understand that Taiwan and the People’s Republic of China (PRC) are moving closer and closer to the day when direct air links will be a regular part of daily life. Despite intense pressure from Taiwanese business people, who are the largest investors in the PRC’s rapid growth, the current Taiwan and PRC governments cannot come to agreement to open direct daily flights between cities in China and cities in Taiwan.  The notable exception to that general prohibition is on special occasions (e.g., Chinese New Year), when Taiwan business people may fly to Taiwan from several major cities in the PRC on specially chartered flights.  Currently, the lack of direct air routes also inhibits tourists moving from the PRC to any site in Taiwan.  Travelers, including the multitude of Taiwanese citizens living and working in China, are forced to spend enormous amounts of time, incur substantial additional air expenses to transit points such as Hong Kong or Macau and pay necessary hotel costs in those places to obtain visas to move between Taiwan and the PRC. Still, there are signs of warming in the political sphere, which indicate that direct air links may soon be around the corner.  Once those links are established, both the mainland Chinese and the Taiwanese tourist industries expect to see PRC tourists pouring into Taiwan.  In fact, Taiwan cities are actively preparing for it. Tourism, Tourism, Tourism According to Taiwan’s tourism bureau, the number of visitors to Taiwan reached 881,292 in the first quarter of 2007, a 2.59 percent increase over the same period last year.  Currently, Japan remained on top with the number of visitors to Taiwan, while the number of visitors from South Korea showed the largest increase.  Both business and leisure visitors from both countries to Taiwan increased considerably. While this news is good, the key to a substantial increase in Taiwan’s overall tourism numbers will still be the opening of direct air routes from the PRC.  At that point, Taitung’s land values will begin to increase quickly as an influx of mainland Chinese tourists are able to travel feely to one of Taiwan’s lovliest areas.  Not only is Taiwan’s potential tourism boom tied to mainland China’s burgeoning economy and shared language, but Taiwan’s long political isolation from the PRC has set it up to be a prime destination for mainland travelers.  Also, new trends in worldwide tourism and the intense competition for all tourism dollars must be watched and matched to investment opportunities.  Taitung itself is positioned by geography and environment to grab also a sizable portion of adventure travelers, environmentally conscious tourists, and an ongoing inflow of Japanese spa visitors. Despite a woeful lack of current English language promotional presence on the web, Taitung still has all the elements locally in place to sustain a thriving tourism boom.  One of those key elements, notably missing in other areas of Taiwan, is an active localized unique crafts industry sustained by artists and craftsmen in Taitung’s mountain villages.  Another important factor is a blossoming new trade in organic teas and coffees grown by villagers in the Taitung Mountains. Those travelers most likely to add into and sustain a new tourism influx into Taitung are: 1.  Chinese tourists With tourist destinations in Japan, Vietnam, the U.S. and Europe becoming more commonplace for PRC visitors, it is likely that these tourists will be drawn to places that restrict their travel.  Taiwan, without a doubt, currently is the NUMBER ONE Asian destination to which a Chinese citizen cannot obtain a tourist visa.  As a destination for the Chinese tourist, Taiwan will be inexpensive to reach and culturally sensitive to the Chinese traveler’s needs and desires.  The shared language of Mandarin Chinese will work further to attract PRC travelers. Since all of Taiwan has been off-limits for PRC travelers for more than fifty years, it’s likely the initial influx across the island will be heavy once it begins.  However, as travelers become more selective in their destinations, Taitung will begin to stand out as a target for return trips.  After all, from a Chinese perspective, Taitung County has the two critical elements that define natural beauty:  mountains and water.  Unlike the rest of Southern Taiwan, Taitung’s political leanings are solidly pro-Kuomintang (KMT).  And that includes the majority of its tribal population, which seems to feel generally that they have benefited more than suffered under the post-1947 rule of Taiwan by the Chinese Kuomintang.  With the KMT currently the most sympathetic to the development of direct air and shipping links with the PRC and the real possibility of a KMT shot at Taiwan’s presidency in 2008, its likely PRC tourists also may feel more warmly welcome in Taitung than in other parts of Taiwan.  Bottom Line:  Eventually the Taiwan government will open the island to PRC tourists.  The move in that direction has been slow but is beginning to pick up speed.

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• In January 2007 the Taiwan government established a brand new Immigration Agency.  By April the government had included the resort island of Penghu, on Taiwan’s West Coast, in a “mini-three link” arrangement.  Using this, Chinese tourists can now extend their travel from Taiwan’s outer islands of Jinmen and Matsu into Taiwan’s closest island of Penghu.  The Penghu immigration authorities and other local government officials are expecting a rise in the number of mainland Chinese tourists.  Penghu businesspeople are hoping it will boost the economy, which has fallen on very hard times due to a collapsed fishing industry.

• In early May 2007 the Taipei Times reported statistics compiled by Taiwan’s Directorate General of Budget, Accounting and Statistics showing that ferries traveling between the islands of Jinmen and Matsu made 1,300 trips in the first three months of 2007, up 436 from a year ago.  During the same three-month period, more than 98,000 passengers (an annual increase of 25.8%) traveled between the PRC and these Taiwan islands.  The 14,000 PRC nationals who traveled via these ferries represent a year-on-year increase of 48%.

• Mainland Chinese are pouring out of China to see the world.  The International Herald Tribune (Wednesday, May 17, 2006) reported on its front page that 2005 saw more than 31 million Chinese traveling abroad, compared with only 4.5 million in 1995.  The projection by 2010 is for 50 million and by 2020 is for 100 million PRC citizens annually to travel outside their nation’s borders for tourism. 

• In May 2006, the PRC government created laws to allow each and every Chinese citizen to exchange annually the equivalent of $20,000 U.S. dollars and take this capital out of China for any legitimate purpose (e.g., tourism, commodity purchase, business investment, real estate investment).   Individual Chinese travelers are known already around the world as “spenders” and likely to be a big relief for Taiwan’s strapped economy. 

• Tourist bureaus from all areas of Taiwan now travel regularly to various cities in the PRC to promote Taiwan as a tourist destination in anticipation of the opening of direct air links.  One bureau director reported he had prepared enough material for a three-day travel services convention in Shanghai.  Within three hours of opening his booth, all his material had already been distributed to the hands of interested PRC travel agents.

• In April 2007, in a move to further woo Taiwan investors to the mainland in hopes of eventual reconciliation with the island, the PRC allowed for Taiwan investors to begin wholly-owned shipping and container transport firms as well as to operate ports and highways in the PRC. 

• A recent Chinese Communist Party – KMT forum held in Beijing in late April 2007 reached agreements that would promote the quickening pace of opening Taiwan to PRC tourists.

2. Adventure Travelers
Taitung is an ideal location for any tourist seeking an “off the beaten path” adventure.  The multitude of aboriginal tribes in the mountains surrounding Taitung City ensures that all sorts of adventures are available – from the very comfortable to the very demanding.  This rugged area, both the poorest and the most diverse in Taiwan, hosts a long coastline on the Pacific Ocean as well as mountains so deep and remote that it can take nearly three weeks for some locals to complete their annual tribal pilgrimage to the “old village.”  The local Taitung economy is investing in its own tourism industry to take travelers deeper and deeper into the magnificent landscape. 
Working with travel agents familiar with Taitung or with the tribes themselves, a unique itinerary can be developed that will allow for para-gliding, windsurfing, grass sliding (the equivalent of snowboarding, but on steep old mountains), mountain treks, and village exploration. 

3. Environmentally Conscious Travelers
With no factories and no heavy industry, Taitung has been known for years within Taiwan itself as an ideal vacation spot.  Today, Taitung’s local government has a combined commitment to making Taitung a tourist destination without giving up a future of clean air and water.  In order to protect the ecological biodiversity and rugged landscape, Taitung’s large aboriginal population has involved itself deeply in local politics to ensure that Taitung will not take the route of rampant development that will result in the wholesale destruction of its environment.  Taiwan’s own central government, at the same time, is pushing environmentally friendly technologies, paying as much as half the cost of building solar systems and offering tax-breaks for wind power projects.  Unlike other destinations in Taiwan, Taitung actively wants to be known for its clean air, beautiful coast, scenic mountains, and welcoming tribal cultures. 

Taitung’s long coastline boasts pristine beaches covered with sand and strewn with wonderful gray, blue-green, white and black rocks (many embedded with crystals).  In fact, those rocks are an Asian collector’s dream, strongly prized for the embedded crystal formations or striations resembling images in nature (animals, fish, or nature scenes).  A day or two of intense beach combing inevitably produces a treasured rock or two for the collector willing to indulge in active searching.  In the water, and much harder to obtain except through certain collectors in Taitung are large “watermelon” rocks, also highly prized in Asia.

In the mountains, Taitung boasts at least one world class para-gliding site.  There is also the beginning of a government supported aboriginal building effort to set up clean, but modest, hostels in the mountain villages so tourists can stay in small communities that may take their fancy or which are accessible to certain specialized activities such as para-gliding.  These hostels, one of which strongly resembles a small Colorado ski resort, appear to be the beginning of a solid bed and breakfast type atmosphere in Taitung, both cozy and intriguing. 

From Taitung, tourists can hop to two beautiful outer islands.

Green Island, located just off the Pacific coast of Taitung, is now a part of the East Coast National Scenic Area. The island is known for its saltwater hot spring (one of only three in the world), coral reefs, and spectacular coastal scenery. The island's reefs, waters, and beaches are great for fishing, swimming, snorkeling, and scuba diving.

Just south of Green Island lays Orchid Island, which takes its name from the wild orchids that grow in the hills. Orchid Island is inhabited by the Yami, one of Taiwan's indigenous tribes, who do some farming but rely primarily on fishing for a living. The intricately painted wooden boats used by the tribe are built entirely by hand and are joined together by wooden pegs.

4. Japanese Tourists
Japanese travelers love of hot springs and the spa experience led them to discover Taitung long ago.  Besides likely connections or knowledge gained from the Japanese colonial presence in Taiwan from 1985 to 1947, the Japanese have a great interest in the political development of Taiwan.  In addition to active scholarly exchanges between Japan and Taiwan, Japanese tourists come regularly to Taiwan and seem to focus their visits on Taiwan’s hot spring areas.

While Taitung County is home to many hot springs, just south of Taitung City is the popular Jhihben Hot Springs resort, which offers several interesting sites of particular interest to Japanese and other Asian tourists. First are the hot springs themselves, with the Jhihben resort providing many public bathing facilities and nearby hotels providing additional private ones.

A short distance from the hotels is a path that leads to the beautiful White Jade Waterfall’s Inner Hot Spring, two kilometers down the main road from the Jhihben Hot Springs.  This hot spring has newer hotels and a mineral water swimming pool.  On a lane off the main road from Jhihben to the Inner Hot Spring is Cingjyue Temple, which has two large Buddha images: one of bronze from Thailand and the other of jade from Burma. 

A suspension bridge leads to the Jhihben Forest Recreation Area, which is located on a mountainside covered with bamboo groves and dense forests. The recreation area offers a riverside picnic spot, campground, bonfire area, flower garden, and a footpath to a waterfall. Near the top is a huge banyan tree, whose long, gnarled roots surround half of a restful pavilion.

Also, on the way to Jhihben is a small village known to locals as the Butterfly Village, which boasts a particular concentration of a variety of butterflies.  Taiwan has 380 endemic butterfly species and the highest concentration of butterflies in the world.  The multitude of species is explained by Taiwan’s diversity of climate, from its sub-tropical coast to its high-altitude mountains.  While development in other parts of Taiwan has resulted in a drop in the number of these creatures in urban areas, Taitung’s mountains still host thriving communities of butterflies such as those found in Butterfly Village.

Buying Land and Property in Taitung  - Processes and Costs
Buying property in Taiwan is very similar to buying property in Western countries.  Loans at extremely reasonable rates are available through local banks.  In December 2006 residential property loan rates at Taiwan banks were at 2.6%.  Money is easily wired into Taiwanese banks and the exchange rate for U.S. dollars is hovering around US $1 to New Taiwan Dollars (NTD) $33 at the time this article was written.  Purchases in cash are easiest if one doesn’t want to carry a mortgage with a foreign bank.  Of course, real estate transactional prices and taxes will apply based on the amount of the sale.  When a property is sold, repatriating profits is no problem.  Wire transfers from highly regulated financial institutions are common and New Taiwan Dollars are a fully convertible currency on the world market.

Foreigners without any previous registration in Taiwan (i.e., family connections or Taiwan passports) must request approval for property acquisition from the Department of the Interior to establish a “household registry.”  Approximately twenty (20) U.S. states, including Hawaii, have mutual agreements in place with Taiwan that facilitate the purchase of property in Taiwan.  A list of those states is available from any real estate agent in Taiwan.  For U.S. citizens purchasing property, Century 21 is the most recognizable realtor franchise in Taiwan. 

While there is minimal property development going on in Taitung at the moment, modern apartment units and townhouses are available for purchase.  Given that the development of these units is fairly recent, the designs are tasteful and pleasing, making them quite different and distinct from the generally unappealing and run-down look of twenty-fifty year-old sites regularly found throughout the rest of Taiwan’s more developed areas. 

In Taitung, new townhouses with all the amenities are readily available just minutes by foot from the ocean at approximately NTD 4,000,000 (USD $121,200) for approximately 1,400 square feet.  The Taiwan real estate market sells based on its own system of measurement called “ping,” which are rectangular units the size of a traditional Japanese tatami mat (90 cm x 180 cm or 1.62 square meters).  Older pre-owned apartment units of about 30 ping are also available in Taitung City for approximately NTD 1,000,000 (USD $30,000).  Be sure to do thorough research and/or view the unit first to get an idea of how “ping” translates into square feet or square meters.  Or, Click Here for a conversion chart 

Actual land units are also available.   Land unit are differentiated into “urban” and “rural.”  Buildable urban lots are measured by the same “ping” unit used to measure the interior of houses or apartments.  These land units sell for approximately NTD 1,000,000 (USD $30,303) for 35 ping, the size of land required for a townhouse.  One can approximate the cost of actually building in Taitung to be about NTD 50,000 (USD $1,500) per ping.  Building a house with an interior measurement of 50 ping would cost about NTD 3,500,000 (USD $106,060).  Rural lots are sold in measurements of “hun,” which are the equivalent of 300 ping each.  Government building regulations require a minimum of 2.5 hun to be used as a buildable rural lot.  At an approximate cost of NTD 1,000,000 (USD $30,303) per hun, a buyer would invest NTD 2,500,000 (USD $75,757) in land to build a dwelling at the same approximate construction cost of NTD 50,000 (USD $1,500) per ping. 

According to local experts and land owners in Taitung, the current prices are historically very low.  In fact, all real estate prices in Taitung now stand at half the price they were just ten years ago.  In the 1990’s, when Taiwan’s economy was still in full swing, the same new townhouse described above would have sold for about NTD 8,000,000.  At that time Taiwan buyers themselves were eager to acquire both land and vacation properties in Taitung.  Since then investment in Taitung has dried up and enormous numbers of Taiwan businesses have relocated to the PRC to take advantage of lower labor costs and more easily accessible buyers.  With fewer jobs available, the Taitung population has decreased from approximately 340,000 to less than 250,000 in just ten years.

Don’t be too late or even too early!

For a Western buyer, timing will be critical in making a property purchase decision in Taiwan.  That is not to say one must buy at this moment, but it is important to watch further developments in the PRC-Taiwan relationship closely as one considers whether or not to jump into Taitung’s property market. 

The real element to watch, of course, is the upcoming 2008 Taiwan presidential election.  A KMT win likely will signal an upcoming significant warming with the PRC over the issue of direct air links.  Of course, by that time Taiwan investors, who are world class businesspeople, will come out of hibernation and leap back into the local land investment mix.  Also, by then Taitung sellers will be raising their prices.

If one waits and hasn’t already explored Taitung before the 2008 Taiwan presidential election, it may be too late to close a deal on the land or property you want before prices begin to climb.  If one buys too soon, however, the amount of time that may be needed to increase the value of the land or residential property purchased could be longer than desired if the 2008 election doesn’t put the KMT in power or the direct air links don’t materialize within a few years.

Prior to the opening of direct air links with the PRC, it is anybody’s guess as to which direction property values might go.  In the current situation, it would be hard to guarantee even the Western basis of an expected annual three percent increase in the value of real estate in Taitung.  However, there is no question that current prices are amazingly low for such a stunning destination on an island so easily accessible and friendly to foreign buyers.

While there is no guarantee that the payoff will be quick, a property purchase in Taitung holds the promise for a significant return once Taiwan’s doors are open to mainland Chinese tourists.  That, in addition to the investments by Taiwan’s central government in Taitung’s upstart tourist industry and the local government’s commitment to environmentally sound development as well as its attention to the development of a tribal crafts industry, puts into place a solid basis for an investment there in land, residential property or rental property.

Of course, should the hoped for return be slower than expected in coming, the investor will always have a beautiful place for a wonderful and relaxing vacation in an extremely clean and environmentally friendly area of Taiwan as the waiting continues for an important door for Asian tourism to open.

Getting to Taitung
Taitung has its own domestic airport.  Regular fifty minute flights go in and out of Taiwan’s capital city of Taipei.  Taiwan’s second largest city of Kaohsiung services Taitung via daily three hour train trips arriving at Taitung City’s central train station.