Evaluation Research On Taiwan's Real Estate Investment Decision

Real estate is the locomotive of economic growth and an important indicator of the economic development.The real estate investment market is also one of the largest industries in the world.The international trend indicates that,while being supported by individual countries' macroeconomic environment,investment conditions,and regulations,as well as other factors,the real estate market is the favorite among investors worldwide.In 2008,due to the impact of the global economic crisis,Taiwan's stock market and financial market were brutally hit,leading to the loss of people's interest in the real estate market.In 2009,the new policy issued by the government to lower the inheritance tax drew many Taiwanese business men,as well as their capital,back to Taiwan.The revival of the global economy boosted stock market.The cross-strait relations improved.Moreover,the real estate speculation was fueled by foreign capital and hot money.These have caused renewed interest and much action in Taiwan' s real estate market.The ever rising housing price then prompted the government to propose several housing policies in an attempt to regulate it.These policies have brought significant impact on the real estate investment in Taiwan.Real estate has the properties of both consumption goods and investment goods.Influenced by the traditional concept of "ownership of real estate means ownership of wealth" and the land tax policy that encourages long-term ownership,Taiwanese people tend to consider real estate the primary asset investment target.More and more investors and enterprises become interested in investing in real estate.Compared to financial goods,derivative financial products,and other investment options,real estate seems to possess a greater attractiveness to Taiwanese people.The trend continues in spite of the policies proposed by the government against the rapidly rising housing price,such as the luxury tax,the real price registration system,the integrated housing and land tax system,etc.Along with the recovery of the real estate market in Taiwan,there is also a continuous increase in the number of construction projects.If a decision maker in construction development industry has the complete information he/she needs to satisfy the consumer demands and control the schedule of the projects,he/she can achieve an excellent business performance.The assessment and decision-making concerning a real estate development object are the first processes to be faced in the product planning stage in the construction industry.What a real estate development planner needs to consider is how to assess and select among all the evaluation criteria from the perspective of an expert within an effective time frame in order to achieve the ultimate benefit for the construction project.However,there are numerous factors and detailed processes involved in the real estate development and investment evaluation.In addition to judgments based on the "experience" and "intuition" of an expert,a scientific and objective assessment model is necessary in order to more precisely and effectively conduct real estate development assessment.The real estate industry has a high added value,and investment in real estate can bring investors huge profits.However,a real estate investment also requires a huge amount of capital.Furthermore,the investment has a long recovery period and high risk.Therefore,before making a real estate investment,a careful investment decision analysis is crucial.Consequently,the ability to conduct effective real estate development and investment with "incomplete" and "uncertain"information plays a key role in the real practice.Conventional decision making method often lets the person in charge or a few decision makers make decisions concerning the project under the rule of thumb based upon available information.However,individual decision making is highly subjective.As the environment becomes increasingly complex,assessment based solely on experiences may lead to wrong decisions.Thus,we can utilize quantitative investigation adopted in scientific research to provide a referential decision making support system in order to strengthen the directionality and accuracy of the decision-making.In the real practice of a real estate investment,oftentimes we need to take multiple criteria into account.Therefore,by combining the Fuzzy Delphi method and the Analytic Network Process(ANP),this research provides the real estate investors with a more scientific decision making method with both quantitative and qualitative features.In this research,we first reviewed and compiled data from literature in the field of real estate investment,and then we interviewed three experts.The data from the literature review and expert interview were combined to create 33 assessment criteria.Next,using the Delphi method,we interviewed 15 senior supervisors in the real estate related industries,including architects,presidents and managers of construction companies,real estate agents,and scholars,and reduced the criteria for real estate investment from 33 to 12.In addition,we designed the first questionnaire based on the 33 criteria.Copies of the first questionnaire were distributed to the members of The Real Estate Development Association of Kaohsiung and the Kaohsiung Judicious Creative Architecture Association using the purposive sampling method.1000 copies of the questionnaire were recovered.We then used the Fuzzy Delphi method to select 12 real estate investment criteria.This is consistent with the 12 criteria chosen under the Delphi method.These criteria include:transportation,public facilities nearby(such as parks,green spaces),return on investment,investment risk,property rights status,living facilities,total price(average unit price),registered floor area,parking space,ventilation,ratio of public facility,and major development projects nearby.This research further divided the 12 criteria into the three major facets of economy,environment,and house after consulting Min-Zhi Liao,Jian-Zhi Zhou(2011),and other supervisors.Lastly,considering the potential interactions between the assessment criteria in a real estate investment,the inter-relations of the criteria were included in the decision making process through the ANP method to assist the case company in choosing the best residential real estate investment project.By combining the opinions of the three decision makers of the case company,three investment projects were ranked in the order of Cishan,Zuoying,and Cianjhen.Based on the result of this research,the decision makers of the case company proceeded to make an investment decision.It was found that the overall benefit of the Cishan district was indeed the best.Therefore,it matched the verification result.