Economies of scale
An inch of land along an MRT line is an inch of gold, which is what makes this area unaffordable. From Prosperity Residences we can walk to Taipei City Hall MRT station in ten minutes and reach Hsinpu station in Panchiao 25 minutes thereafter. Walking through a long market gallery, past a series of obstacles formed by street vendors, cars, motorcycles, and crowds of people, we finally step into the sunlight.
Situated near the MRT and the East-West Expressway, Panchiao's Mingtsui Borough stretches over six hectares (18,000 ping). Along its two main streets and dozens of alleys there are mostly four- and five-story residential buildings constructed in the 1960s and 70s. Considering the completion of various transportation infrastructure projects, resulting in a large increase in potential value, 57-year-old five-time borough warden Hsu Wen-hung has big hopes for community regeneration.
Since October of last year, Hsu has called a series of borough meetings to explain his plan to Mingtsui's 1,600 families. Their response was enthusiastic. When news of Taiwan's biggest citizen-initiated urban renewal project spread, Hsu Wen-hung became the best-known borough warden on the island.
Lighting a Long Life cigarette in his office, which has a leaking roof, Hsu Wen-hung says, "I'm only interested in solutions to real-life problems. When your house leaks, you can fix it yourself. If the owners of an apartment block are willing to rebuild it they can do so, but some problems require starting afresh on a big scale."
Aside from the fact that the houses in Mingtsui are old, its narrow lanes cause all sorts of problems. "Neighbors of 20 years standing often get into a free-for-all over a parking spot," says Hsu. Rows of motorcycles parked under street arcades, store closures, and motor-scooter-riding purse snatchers in dark alleys have become increasingly common of late.
The community's urban renewal project envisages more green areas and leisure facilities, as well as high-rise buildings that will house supermarkets, malls, and private businesses. After Hsu Wen-hung began to drum up support for his project among local residents last year, the price of apartments in 30-year-old four-story buildings began to rise. According to a local real estate broker, since the beginning of this year the going price for an old apartment has climbed from NT$110,000 to NT$170,000 per ping.
Houses no one wanted to buy until recently have suddenly attracted keen interest among potential buyers. Major real estate developers have smelled an opportunity to make big bucks and are swarming in. The most energetic player is Taiwan Development Corporation (TDC), which in recent years has transformed itself into company that specializes in urban renewal. Although it has not yet signed a formal contract, TDC has sent a special task force to Tokyo to learn what it can from Roppongi Hills, Japan's most famous urban renewal project, in the hope that it will be able to apply these lessons to the redevelopment of Mingtsui.
"The recent allegations about TDC have affected the views of many locals," admits Hsu Wen-hung, who is working hard to win over residents, 10% of whom must approve the project for it to be approved.
Unexpected problems can arise just when the light at the end of the tunnel appears. The case of Mingtsui Borough illustrates that time is not always on the investors' side; to housing developers it may simply be a synonym for risk.
Advanced building methods and technology have reduced construction times but communication and negotiations can drag on indefinitely. The projected cost of renewal on this six-hectare site has reached NT$200 million. In addition, there are tangible and intangible costs arising from negotiations with residents, as well as alarmingly high costs for preparatory work.
"The longer time drags on, the higher the risk. Long and tedious discussions make it impossible for developers to predict when they will recoup their investment." Gradual real estate saturation in the greater Taipei area has made it increasingly difficult to find land for new building projects. Chien Po-yin of Sheng Yang Real Estate has set a two-year time limit for the completion of all development projects his company undertakes: "There aren't many companies in our business with the financial resources to stubbornly press ahead with a major and complex project such as Mingtsui."
"As soon as they hear the term 'urban renewal,' people imagine another Roppongi Hills, the Tokyo landmark," says Chang Chin-oh. "We envy the remarkable success of Roppongi Hills but we aren't willing to learn from that project." The Mori Building Group in Tokyo spent more than 15 years lobbying residents to approve the project, negotiating the terms of the contract, completing the construction work, and attracting business. "It takes time to get an inch of gold for an inch of land," concludes Chang.
When the Mingtsui Borough project hit the headlines, all sorts of proposals started pouring, which now cover the walls and desk of borough warden Hsu Wen-hung (right). But this old community, which is located near the MRT and the East-West Expressway, still has a long way to go to transform itself.