50-year Clause or old-age decision

50-year Clause or old-age decision

All master deeds, I believe, in the Philippines have either a 50-year clause or wording about the building and what to with it when it may need major structural work or demolition.  Of course, will the developers still control the boards they seem never to leave is another associated question.

Someone on another forum and in an email giving me permission to quote him has written the following.  Yes, all those out there that want to work the numbers and write articles about the prices and the future of the investment start your writings!  While 50 years may seem a long way off and many will not be here, your beneficiaries and/or your units as the time line ends will have losses to deal with if the figures are true.

First post:

"I don't know if it is a good time/place to ask.

I read (in this thread or in a discussion which had link to this thread) that 30% downpayment alone is enough to pay for the construction costs, the rest is developer profit.

If the building were build 50 years ago and half of owners voted to bring it down because repair is no more cost effective.

How much a unit owner would get paid for the unit share of the land, 7-10% of the current market price of the unit or it would be much more?

What I'm also thinking the mismanagement is one thing, but if there are some problems with construction like smells from adjacent unit or from waste treatment facility, I don't know elevators may be replaced probably, is it not better to sell the unit and to look for a better one?

Thanks to all posters there is a lot of useful information here."

 

Second Post:

 

"ok i racked my brains a bit more

say in taft i found ad selling lot 2340 sq m for p198M

price per sq m then around 85K

then say they build 24 store highrise with common areas 25%

say 60sq m unit is priced 4.4M

85K/24 = 3.5K per sq m

60 sq m * 1.25 common areas coefficient *3.5K per sq m= 265K

265K / 4.4M = 6%

minus cost of demolition plus profit from scrap, i think overall it will be minus.

so in the case of structural failure (e.g. earthquake) basically condo owners get almost nothing (<6%)? or there is insurance. or natural decay after 50 years the land unit price ratio is likely remain similar, so land price rebate or deduction from the cost of rebuilding will very small.

interesting how much it costs to build using similar calculation given labor cost, total work hours, prices of materials (and a lot of money i guess is spend on advertising collectively by different big developers to keep the prices overblown). in any case it must be very good business for developers - if units are sold, i wonder why some projects i checked are built so cheaply but sold like P110K per sq m.

in 2007 we had built a big house of good quality (full supervision and all materials we were selecting and buying ourselves as needed) the total bill was around P15K ($300 back then) per sq m excluding the land."

 

Third Post:

 

"i found an article:

"Century Properties ... would spend P1.7 billion to build the condominium ... was expected to book some P3.5 billion in revenues from the new building"

so 1.7b expenses 3.5b revenues the profit (3.5-1.7) / 1.7 = 105%.

1.7 / 3.5 = 48.5% of revenue would pay for all expenses.

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from my experience if i were building a house again i would add third ground wire and separate wiring for the case of outage when power is from inverter and batteries, spanish gutters were too flat and rusted fast, would pay more attention to how workers lay tiles, etc.

i mean since your developer is still around managing the building they know about the problems in their older projects like electrical wiring too thin and may burn without tripping the breaker, smell propagation etc. and they won't repeat those mistakes in their subsequent projects, sell and buy then maybe not huge difference also as the building gets older and requires more maintenance monthly dues may increase."

 

Message to me:

 

"if you find those useful you can quote those posts anywhere, i was just looking for some answers.

6 months ago i made a 5% reservation for a korean condo inside a freeport zone which i need as an office (problem with internet and i have to work at nights at the current location). it is 50 year + 25 year option on explicitly leased land around $2K per sq m, i wanted to know whether the cost of land is significant, it appears to be not the case. i'm still hesitant whether to proceed or leave it.

i found for example an ad for 82 sq m condo in tampa, florida with garage you can buy now for $102K which was originally $195K in 2006. i have a friend there who owns a house he bought in 2005 for $282K now he tells the price is at best $220K.

my brother in Israel bought an apartment 60 sq m for $90K in 2005 (the market bottomed in 2004 the price then was $85K). now its price $192K.

it is difficult to predict what will happen with prices.

you should be careful, the life is cheap in the philippines, i don't know real property, but i tried to get through smartbro customer support since august, talked maybe with 50 agents and 10 supervisors, even as they are polite, the repeat the same thing all over again and nothing changes, it is pointless. so if you have an opportunity to talk to someone in charge maybe you get more useful information from them."