Real Estate Investment

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A choice of Investing your Money in a Subdivision or Condominium? Let's put into consideration the how much amount of money a Developer would pour into the development of let says a 30 floor building in a 1000 sqm. lot in an inner City development.

On the other hand a 30 hectare of land to be develop into subdivision definitely in an inner City but in a nearby City Development. These two information varies a Big variance in terms of cash exposure as far as the Developer is concern.

Let's tackle first the High rise condominium. The location of this type of project is more or less in the center of the development. The value of the property is very high. If the the development is on a joint venture, which normally happens, Meaning the owner of the lot talks to a Developer or the other way around for a joint venture. In this scenario, the 70-30 agreement will normally apply. The 70% of the total development goes to the Developer and the 30% goes to the Lot owner.

I just want you to give an idea, for example, If the cost of development is PHP55,000.00 per sqm. plus the value of the lot will be added to the cost, Easily the Developer will sell the project at no less than PHP100,000.00 per sqm. Buying a one bedroom condo unit now for an area of 36.00 sqm. will cost the buyer for PHP3.6 Million on a pre develop price.

The development will normally take 3 years including the time consume for the required documentation. If your building has 10 units per floor, there will be a total of 300 condo units the Developer has to sell. Constructing a building is a high financing. Very big cash exposure on the part of the Developer.

On the other hand, subdivision Development is a lot lower because in the first place this is a horizontal not a vertical development which has a different requirements in terms of construction materials. Cash exposure on the part of the Developer is minimal compared to that of a high rise Building.

Prices of Subdivision could start at PHP5,000.00 per sqm. This would depend on the cost of the lot and the concept of development. This price per sqm. will fit to the middle class development and the Class A & B income group.

In terms of investment on the part of the Buyer, In a subdivision development, there is a bigger potential on the appreciation of lot price. For a mid term investment let says 5 to 10 years your investment will normally double or more.

Much better than putting your money in the bank. There are subdivision developments that appreciate so fast. It depends on the location and type of development inside the subdivision and within the vicinity of the subdivision.

Investing in a condo units is very minimal in terms of appreciation on price. This is limited to the number of years since buildings depreciates. However, in
condominium, this generates fast income. Once the unit is turn over to the buyer, the buyer could have it rented out.

This is a passive income generating on the part of the investor. There are condominium project like Gilmore Tower in new Manila, the Cathedral heights Just at the back of St. Luke's Medical Center in new Manila. These are a typical example of a best position condominium in new Manila, Quezon City. Just check it in your respective Country the type of development that I mention here.

An example of subdivision development outside the City and yet has a good potential for investment because of the kind of development the Developer put in is Sun Valley Estate in Antipolo and Splendido in Tagaytay.

Both subdivision has a world Class Golf Course inside. This is a perfect place to live...I hope i was able to give you a more or less complete information which is very vital in your decision making on where to put your money for an investment.


Peter E. Cadorna

Thanks for your time!

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