Land in Metro gets scarce; prices soar

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by IRMA ISIP

Malaya Business Insight

November 2012

http://www.malaya.com.ph/index.php/business/business-news/18109-land-in-metro-gets-scarce-prices-soar

Old buildings and  factory sites in Metro Manila are giving way to office spaces and high-rise apartments as land gets more scarce.

Victor Asuncion, head of research of property consultancy CBRE said Metro Manila is running out of space for property developers, fuelling redevelopments in certain areas.

Asuncion said the trend has pushed prices in Fort Bonifacio, up 25 to 30 percent this year making it too expensive.”

“The problem faced by developers is that they are running out of land to develop (in Metro Manila,” Asuncion said.

Developers now go to areas surrounding business districts. Asuncion said for example that redevelopment in Mandaluyong is extensive, pulling down factories in favor of residential and commercial condos.

Same thing is happening in Makati, Asuncion said, where medium-rise  buildings are taken out and rebuilt as high rises. .

“This is because those buildings were built for traditional offices and not for BPOs,” Asuncion added.

Some of the industrial areas are converted around the Metro Manila environs and this would continue, according to Asuncion.

“They determine the highest investors of the property and they go for it. In Makati, most of the highest investors are residential condos catering to BPOs,” Asuncion said.

He said that in Makati, in Malugay area, Avida and Linear condominiums are built in spaces used to be occupied by  light industry manufacturing and warehouses.

Asuncion said the land values there have jumped to  P60,000 to P100,000  per square meter .

At this price, Asuncsion said, these areas are just too expensive for an industrial space.,

“You have to pay commercial real property tax for something  that is underutilized. So you give way  to the highest investor which is a condo or an office or a mall where they can realize the true value of the property,” he said.

Orion Support Incorporated (OSI)

Dear Rick,

Following up from my initial request to you for support in finding a new office location for our company, Orion Support Incorporated.   Well, we moved in to the LTA Building on Perea Street, fifty meters or so from Paseo de Roxas this weekend, only a 4 minute walk to AmCham and under excellent terms.

While I think you assigned both Morgan Mcgilvray and Sherdil Rana to support our original request; as you know, Morgan was very tied up with his wife giving birth during the period we identified this location and negotiated with the landlord, Mr. Mike Arroyo. Yes, the former First Gentleman. But in my short interaction with Morgan, I can see that he is a solid, young professional.

With regards to Sherdil, I want to tell you that with 35+ years of interviewing hundreds and hundreds of individuals, I was impressed with his professionalism, focused support and “can-do” attitude  from the point of identifying our potential office space, and through the negotiation stages prior to the signing of our 6 year contract.  I was impressed with his considered opinions, insightfulness with regards to Philippine business culture and his sage advice related to our strategy in the negotiation process.  Sherdil was able to negotiate a rental rate per square meter about 150 – 200 pesos less than the going rate in this area, and with only a 7% increase after 24 months. Add to that, he secured for us three parking slots at no additional cost, two months security deposit versus the standard three, and two months advance rent to be applied to the front end of our contract versus the back end as is the case in most rental contracts. And, he got the landlord to repaint the entire office with three coats of mildew resistant paint at their expense.   But best of all, we were given a 6 year lease, with only having to give two months notice and forfeit only our two month security deposit to move out anytime with no additional penalty!

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