Taiwan has become one of mainland China's top trading partners, and its manufacturers have invested over USD 100 billion in Mainland enterprises. While Taiwanese are, to a certain extent, able to study, travel and invest in mainland China, a myriad of stringent restrictions prevents mainland people and capital to flow across to Taiwan.

Ma Ying-jeou's policy plan will establish a reciprocal arrangement and strengthen the relations across the Strait.  Property market related policies include:

• Implement weekend charter flight services as quickly as possible and daily charter flights by end-2008, normalise flight service by 2009
• Allow mainland tourists to visit Taiwan, with up to 3,000 per day within the first year followed by subsequent increases
• Open mainland investment in Taiwan's property market
  Covering office, retail and hotel sectors, the Paper analyzes the implications to the property market based on the new policy plan.

Office
"Taipei offers some of the lowest occupancy costs in Asia (figure below). We expect this to translate into increased demand, particularly when we take into account that Taipei is situated at the centre of East Asia," noted Tony Chao, Managing Director of Jones Lang LaSalle Taiwan: "Once capital from Mainland China is able to be invested in the office market, we anticipate a steep rise in capital values."

Retail
Retail sales are expected to recover under the new administration through improved consumer confidence and an increased number of Mainland tourists. In analysing the expenditures of mainland tourists that visit Taiwan, it becomes quickly apparent that they place a great deal of importance on shopping, relative to other endeavours, this will buoy the sector significantly.

Hotels
Arguably, the biggest beneficiary of direct passenger flights would be the mid-range hotel market through an increase in Chinese tourists.  Currently, Taipei suffers from not being a destination for business travellers in and of itself. However, if it were a short trip from places such as Shanghai or the Pearl River Delta region, the number of businesspeople who would include Taipei in their travel itineraries would expand significantly.

"This reciprocal policy plan will open more options for our Mainland China investor clients," noted Pol-Henry Cox, country head of China, Jones Lang LaSalle.  "We view this as a definite win-win opportunity for both Taiwan and Mainland investors in the real estate sector."

While no one can be certain how long it will take for policies to be implemented and even longer to reach their full economic potential, what we can be certain of is that it will take place. Tony added: "The common language and culture shared by Taiwan and Mainland will contribute greatly to the capability of Mainland occupiers, investors and developers to operate in Taiwan."