In the five years since the SARS epidemic in 2003, Taiwan's housing market has experienced an unprecedented run of prosperity that was lifted in a bout of frenzy to new highs after the election of the Kuomintang's Ma Ying-jeou as president on March 22.

Upstart property developers have bid land prices to record highs, listed publicly via back-door listings (where unqualified companies buy listed firms to gain a presence on the stock exchange), and competed aggressively to make a name in the market. Yet one developer with an established brand name, Fubon Land Development Co., has remained quiet.

Nonetheless, it is a silence that has spoken louder than the clamor of its competitors.

The company quietly generated strong results in 2007, totaling NT$5.1 billion in revenues with a profit margin of 6.29 percent, and ranking sixth in revenue growth among CommonWealth Magazine's Top 500 Service Enterprises. Together with Fubon Real Estate Management Co. and Fubon Property Management Co., it formed a property business group that lowered staffing costs by 50 percent.

"We insist on not going public or hoarding land at high prices,"says architect and Fubon Land president Hsueh Chao-shin, sitting in the Fu An Memorial Building he designed, resolutely sticking to his principles in the face of a booming market.

In the mind of Chuang Mong-han, an associate professor in Tamkang University's Department of Industrial Economics, Fubon Land proves the old adage, "Good things come to those who wait."

 Bunting and Swinging Away

Fubon Land has remained a pillar of stability amid ups and downs in Taiwan's property market, partly because of the Fubon Group's deep financial resources. But the key to its success is the strategy of "bunting and swinging away at the same time."The "bunts"are residential developments, which generate cash quickly, and the "swings"are commercial properties, managed over the long-term.

This flexibility differentiates Fubon Land from competitors in the industry, 90 percent of whom are only capable of promoting residential developments. Fubon Land's abundant financial resources, zero debt ratio, and in-house ability to build residences and manage commercial properties mean that it receives continuous injections of rental income and can survive any fluctuation in the domestic real estate market. At the same time, while Hsueh refuses to publicly list the company, he has securitized its real estate holdings, launching two REITs (real estate investment trusts). The two funds have combined total assets of more than NT$15 billion – roughly the same as the capital of Taiwan's largest property company – and earn rates of return of 15-22 percent.

"We hold on to our commercial buildings for an average of eight years. In the time it takes us to promote one project, other developers could launch three residential projects. It not only takes time, but the resources we put into operating and managing the building also exceed those of other developers. The entry threshold, of course, is also very high,"Hsueh says.

The strategy has paid dividends. Fifty percent of Fubon Land's NT$5.1 billion in revenues in 2007 were generated by commercial real estate.

"Many developers only build residential buildings and are like processors of goods. They buy land and build on it. When the project is complete, they sell it, and then when it's sold, they buy more land,"Chuang says. "This perpetual cycle keeps share prices steady but is inherently full of risk, as the moment the market slumps, idle land holdings can create cash-flow problems."

Promoting 'Green Building'

Fubon Land does not overbid to buy land or worry about the number of projects it promotes. At a time of wildly rising expectations in Taiwan's housing market, Hsueh's guiding principle has been to watch from the sidelines and devote his time to providing innovative services.

Since completing a three-year corporate re-engineering campaign called "Project One,"the Fubon Group has become more customer-oriented and has reflected customers' needs in its products, especially in its role as a domestic pioneer in green building to cater to the growing interest in conserving energy and environmental protection.

Walking into Hsueh's office, one is immediately drawn to the glass curtain wall that looks out over Ren Ai Rd. and across the street to the Fubon Taipei Financial Center. That large window made of low-emission glass, the building's rooftop garden, and other green features in the Fu An Memorial Building emphasize the core philosophy of green building – living and working in harmony with the natural environment.

But to Hsueh, these principles are already outdated, and he is constantly looking for new ways to advance green building concepts.

With soaring building material prices, which have doubled project costs, unlikely to be reversed in the near future, the challenge has become how to use lighter-weight but more efficient materials to create residences of comparable quality.

"Innovation brings about change starting with the basics, which is how to make a building more 'lightweight,' "Hsueh says. Fubon Land is contemplating ways to slim down reinforced concrete, steel frames and exterior walls, in the belief that lightweight architecture is, in fact, another viable sustainable building strategy.

Hsueh has also asked his subordinates to study how to design a work environment that raises productivity, given that the average construction costs of buildings have also increased. These many concepts will all be featured in Fubon Land's Fubon Dunnan Building to be built on Civic Boulevard in Taipei City.

Hsueh acknowledges that Fubon Land does not have any land to build on at the moment, but he is not under the same pressure as publicly listed companies to amass land and get new projects rolling. His focus centers on more complex integrated development projects that include large-scale office and shopping spaces, such as the "Gate of Taipei" twin towers next to Taipei Railway Station, scheduled to be launched in 2011, and the Sindian Yulon plant development project, to be tendered at the end of the year.

"These projects really test the ability of developers to plan and manage properties and have a high entry threshold,"explains Hsueh, who says he is currently studying two or three such large-scale projects.

With a flexible strategy that enables it to "bunt"or "swing away,"Fubon Land is quietly but steadily forging a path of innovation in Taiwan's real estate sector.

Translated from the Chinese by Luke Sabatier

Chinese Version: 長短打兼施　低調創新