Changes in the global situation have led to fluctuations in raw material prices, including increases in the prices of copper, aluminum, steel bars, cement, glass and other building materials. (Photo/Provided by Xianglin Construction)
Taipei City has been promoting urban renewal for many years, but the overall progress is still not as good as outside expectations. Experts said that many developers have recently received reports that they are facing practical difficulties, including lengthy review processes, and a significant gap between the project cost estimation benchmark and market conditions, which affects the speed of case advancement and financial feasibility.
The problem of aging housing in Taipei City is obvious. According to statistics, there are about 670,000 houses in the city that are over 30 years old, accounting for nearly 72% of the city's total. Among them, there are about 520,000 houses that are over 40 years old, which is equivalent to 1 house in every 1.76 houses that is over 40 years old.
Many old apartments lack elevators and parking spaces, and face problems such as aging pipelines, water leakage, and insufficient earthquake resistance. In an aging society and increasing demand for disaster prevention, these issues continue to attract attention from all walks of life. Currently, players in the market, including Puzhen Construction, Guande Construction, Runtai Innovation, Huagu Construction, Zhongtai Construction, and Changhong Construction, continue to invest in urban renewal and dilapidated reconstruction projects. However, as construction costs, financing rates, and landowner repayment expectations increase simultaneously, players generally face challenges such as increased costs, low institutional recognition, and increased difficulty in allocation negotiations.
Lai Zhengyi, chairman of Xianglin Group, said that recent changes in the global situation have led to fluctuations in raw material prices, including increases in the prices of copper, aluminum, steel bars, cement, glass and other building materials. In addition, China is also facing problems with earthwork processing and removal this year, which has further increased the cost of basement excavation, with the cost per square meter increasing by approximately 30,000 to 50,000 yuan.
He pointed out that the total construction cost estimation basis used by Taipei City's current "Urban Renewal Project Cost Items" was based on the version approved by the Urban Renewal Review Conference in January 2013. It has been more than two and a half years since then, and there is a significant gap with the changes in construction costs in recent years. Taking a 15-story residential building as an example, under the current system, the cost recognition basis per square meter is approximately 204,000 yuan. Even if items such as land improvements and special construction methods are included, the recognized amount is approximately 227,700 yuan.
However, according to the current market conditions, the actual construction cost of RC houses with more than 15 floors has reached more than 285,000 yuan per square meter, residential buildings with more than 20 floors are about 320,000 yuan, and SRC steel buildings with 30 floors may reach 350,000 yuan. There is a gap of at least 50,000 yuan per square meter between the current system recognized cost and the actual market cost. If calculated on the scale of a large-scale urban renewal project, the overall cost difference may reach hundreds of millions of yuan, which will affect the financial feasibility assessment of the case. In addition, in urban renewal review, although the starting point is to protect the rights and interests of landowners and residential safety, the review procedures are complicated, which often results in cases taking many years from integration, submission, review to actual start of construction.
Regarding the system, Lai Zhengyi suggested that the city government can review the recognition mechanism of rights conversion costs, adjust the current fixed cost basis to a method linked to the price index, and regularly review factors such as construction project prices, steel bars, cement, concrete, mechanical and electrical equipment, labor costs, financing rates, and construction period changes to reflect the actual market conditions.
