TAIPEI: Taiwan property prices may rise at least 30 percent near the island's main airport once the government renovates 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 January 29, adding, "Once the train is ready, a 30 percent surge in housing prices won't be a problem."

Remodeling 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 January 29. A new rapid transit system to the airport will be ready between 2014 and 2015, Yeh said.

The government has budgeted NT$293.7 billion ($9.2 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 mainland, the largest exporter to the island.

The Taoyuan airport overhaul was among Taiwan leader Ma Ying- jeou's election campaign pledges before taking office in May 2008. His 12 i-Taiwan (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 percent in the third quarter.

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 traveling 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 $2 billion at Hamon Asset Management Ltd in Hong Kong, said by telephone in Hong Kong, adding, "Business people would also want to buy apartments near the airport to facilitate their travel."

Tourist arrivals from the mainland 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, up from 4.4 million last year, 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 Yeh.

The first impression a visitor gets when he comes to Taiwan will be the airport, Hamon Asset's 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."

China Daily/Bloomberg News

(HK Edition 02/02/2010 page2)