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Euro Chocozone Buyer

BGC / The Fort: Uptown, Park Avenue, etc... How Bullish?*

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PHP200,000 per square meter for Avida's "military-style" units.

http://www.skyscrapercity.com/showthread.php?t=1856899&page=3

 

Well it was reported by Avina on SSC that tower 2 of Avida Towers Turf in BGC was recently launched and the price is approx 200,000 per square meter. At least I could understand Federal Land getting into PHP200,000+ per square meter flats -- Federal Land tries to be on par with Megaworld/Alveo --

but Avida??? -- Many commentators say they deliver sub standard units with too small windows,

an almost non existent kitchen and a bathroom with tiles in the shower that stop halfway the height of the walls.

leaving half of the walls without tile protection from the shower water??? 2 windows and only 1 opens.

In short, "military" units. In Europe the window size must be at least 1/8 the floor size,

I don't know about PH...

So Avida has joined the madness. I just wonder if rental rates have doubled as well???

I bought a 2br flat in Verte for about PHP105,000 per sq meter late 2013, -- it is almost double now.

I have a feeling that many investors at these price levels are going to be slightly disappointed.

(and that's perhaps an understatement).

The only thing that could save them from taking a loss if the rental return drops below

the expected rate -- leave alone a bank loan because that's probably suicide -- is to sell it to a bigger fool.

Are Avida's flats liveable?

... Some people live in these flats... I think so, but they require substantial investment, like a normal kitchen, more tiles in the shower area, more electric wiring... This will no doubt add greatly to your cost.

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Well it was reported by Avina on SSC that tower 2 of Avida Towers Turf in BGC was recently launched and

the price is approx 200,000 per square meter. At least I could understand Federal Land getting into

PHP200,000+ per square meter flats -- Federal Land tries to be on par with Megaworld/Alveo --

but Avida??? -- Many commentators say they deliver sub standard units with too small windows,

an almost non existent kitchen and a bathroom with tiles in the shower that stop halfway the height of the walls...

. . .

Are Avida's flat liveable?... Some people live in these flats... I think so, but they require substantial

investment, like a normal kitchen, more tiles in the shower area, more electric wiring... This will no doubt

add greatly to your cost.

- ECB

YOU cannot Sell these flats at P 200k - maybe Avida can, but a reselling buyer cannot get that much.

I bought an Avida unit two years ago for P95k psm (by paying cash & getting a 10% discount - so P105k, was then the "normal" price.)

And a friend of mine is seriously considering buying an Avida unit at ARCA south, for something like P130K per sqm. (+23.8% higher than P105k in 2 years) but I would not be happy to pay more than that

=========================

7hUtHIf.jpg

Avida Towers San Lorenzo
Avida Towers San Lorenzo is a two-tower condominium development that rises to 29 stories. Developed by Avida Land, Tower 1 was (offered for sale) in 2008, while Tower 2 was (opened for sale) in 2012. With the aim to provide residential units that are spacious and affordable, Avida Towers San Lorenzo should be a rare find for any value-seeking resident. Tower 1’s offerings include studio-type units with sizes of 22 to 25 square meters...
Visit Chino Roces thread - ATSanLo is next to Waltermart
Visit Development page

=========================

IMG_0141.jpg

This sparsely furnished studio in AT-SanLo is asking P 16,000 monthly

- the cheap ones go fast. Last time I checked, Avida leasing had leased out 250 of its 260 units in AT-Sanlo.

That leaves just 10 (3.8%), the sort of minimum number you might expect would be generated from normal turnover.

BTW, I am happy in my SanLo small unit. It suits me better than a hotel room - maybe I should take a photo - it is much more live-able than the above one.

Because it is only a 12 minutes walk from Greenbelt mall, I do not mind slightly small windows.

I have invested an extra amount of money in extending the kitchen counter, and adding a nice mirrored wardrobe to make the flat brighter.

When my (larger) unit is completed at Kroma, I will probably move there, and will then either SELL or Rent out my small 22 sqm Avida studio.

I reckon, if I can net P 120k per sqm (P2.6mn) or more by selling, I will be very happy. The units have all been turned over, and are renting well.

There seems to be an almost unlimited rental demand for cheap flats, a short walk from Greenbelt, so a buyer can be found at P 2.6mn or more.

One thing I found very surprising as that Avida was reported to have bought a large plot of land, 3 minutes walk from where I live at P 2 billion pesos.

If they construct 2,000 units there, which seems like a lot for me - then those units will have to be sold at P150k or more, to include an average of

P 1 million per FLAT - for the LAND cost only!

I started a thread on the area, when I read about that Avida land purchase:

Visit Chino Roces thread - focuses on the area between Waltermart and Magallanes MRT station - where San Lorenzo Place is located.

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How bullish?????

 

VERY BULLISH.

 

Federal Land announces another massive price increase. starting august 1st 2017.

(I think they increased the prices of the units in the already launched towers to the same level as Park Avenue --

Park Avenue already had those high prices I believe when it was launched late january this year).

This is what I have read on www.preselling.com.ph

 

HOT TIP
MASSIVE PRICE INCREASE
Massive 24% price increase for Federal Land condos in BGC on August 1, 2017!
  • From ₱170-190k per sqm to ₱210k per sqm
  • Almost 24% price increase!
  • Get an instant increase in your investment!
  • Hurry! Reserve before August 1, 2017 to take advantage of the current rates!

Massive 24% price increase for Federal Land condos in BGC on August 1, 2017!

  • From ₱170-190k per sqm to ₱210k per sqm
  • Almost 24% price increase!
  • Get an instant increase in your investment!
  • Hurry! Reserve before August 1, 2017 to take advantage of the current rates!

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"VERY BULLISH.

Federal Land announces another massive price increase. starting august 1st 2017."

I have noted elsewhere that Ayala and other developers are raising prices fast,

but I still see signs of weak demand for secondhand sales.

And even Avida, which is experiencing strong demand for its units below P20,000 is not raising rents

 

So the gap between rising new property prices, on one side, and stagnant Rents and secondhand prices, is widening.

Since you and I cannot sell at the developers' prices, I regard Rents-and-Secondhand as the real market.

If you have any data on Rents or Rental rates, please share it

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Hi

 

 

The high price phenomenon also exists in the bay area now, with most SMDC 1-Br flats under construction now

already costing 190K+ per square meter. This is absolutely insane. I have found a facebook page

that only offers resale units, so we can somehow gauge the secondary market - in action.

I just wished they had doubled the residential stock in the Bay Area, to keep prices down.

Why has SMDC raised its prices soo much with all this new supply?

 

Yes I am getting the impression that the price level in BGC and the Bay Area is higher than that of Makati.

 

The facebook page is called: BEST OFFER from SMDC Resale Condo Units

https://www.facebook.com/search/top/?q=BEST%20OFFER%20from%20SMDC%20Resale%20Condo%20Units%20%20

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Are there TWO REALITIES in PH property?

On 7/23/2017 at 4:05 AM, Euro Chocozone Buyer said:

Hi

The high price phenomenon also exists in the bay area now, with most SMDC 1-Br flats under construction now

already costing 190K+ per square meter. This is absolutely insane. I have found a facebook page

that only offers resale units, so we can somehow gauge the secondary market - in action.

I just wished they had doubled the residential stock in the Bay Area, to keep prices down.

Why has SMDC raised its prices soo much with all this new supply?

Thanks for that.
I think we have TWO Separate Realities, and you seem to be focused on the one that is "less real" to me.
1 / Future Dream : Prices asked by Developers for Properties to be completed in the future
2 / Today's Reality : Rents asked, and concluded & the actual prices achieved when selling in the secondary market
==
You and I can BUY in the "future dream" market, but we cannot sell there. Only the developers can & do.
Moreover, their "future dream" prices are supported by advertising, massive marketing teams, and financing structures.

I strongly recommend that you TRY TO SELL one of your properties in the secondary market, so you can see how different prices in the "today's reality" market are from the "Future Dream" market. I think it will be very eye-opening for you.

I am watching people trying to sell properties, and they are finding it hard-going. My own experience is limited. One of my properties I bought for cash at about P 3million two years ago, when the "normal" price under a payment scheme was P3.8 million. Today, the developer is selling something very similar one floor lower at P5.2 million (/28 = P186k psm). I found an agent who claims to have buyers for such flats, and was willing to pay P3.7 million - ie P100k below the developers price of two years ago. I sent him a message offering my flat at P 4.95 million. I did not even get a response.

What is maintaining the illusion of the strong market?
As best as I can tell, there are many mainland Chinese buyers, who are buying in their own names, or through friends, families, and business connections. They seem to like the monthly payment schemes offered by developers. And like some OFWs seem to focus on getting "low" monthly payments, and seem less aware of the total price, and the sort of actual yield they will achieve in the future.

BTW, I would really like you to tell us something about the Rents you are achieving on your properties. To me, that is what we should all be focusing on, not the artificially high prices that developers are pasting on their new projects.

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Is this project real?

I stumbled across this video, which talks about an iconic new tower planned for BGC

===============

The Icone Tower - The Light of Manila (in Fort Bonifacio Global City BGC)

Published on 23 Jun 2017

This a new upcoming project in Bonifacio Global City beside UPTOWN MALL by BCDA and Henning Larsen HongKong - THE ICONE TOWER MANILA. This would give the neighborhood community in Uptown Bonifacio a sense of prime location to WORK-LIVE PLAY & SHOP. This will serve as a new benchmark to the skyscrapers in Metro Manila and would revolutionize the way we picture the skies.

Claude Bojer Godefroy (Partner and Design Director) - Bonifacio Global City will soon work on a very special building it will transform its image and become a new focal point of Manila. I think its a good idea to add more character in the business district that have few distinctive buildings, I think its a good idea to make a statement about building in Manila today, a statement about being generous with public space, about giving back to the city and of course to its people, a statement about filipino architecture is about, but first we have to understand what makes the ICONE successful.

Invest NOW in Uptown Bonifacio, BGC!!
1BR unit starts at P15k per month!!
2BR/3BR starts at P20k per month!!

"We call the top part, "The Light of Manila".

How, er, Luciferian can you get?

=== ===

18920330_1726812127334583_89052711669136

There is a SSC thread:

BGC | Icone Tower - The Light Of Manila (BCDA's Iconic Tower ...

www.skyscrapercity.com › ... › Metro Manila Projects on the Rise › Taguig
Jun 6, 2017 - 20 posts - ‎17 authors

Wow, this will surely be one of the icons of Manila once built. Witty din ng name, ICONE Tower, hehe. Now PNOC has to level up the design ...

Comments:

Grand Hyatt's ground to roof deck height is 258m while Icone Tower's height is 301m. The former's official height including the spire is 318m while the latter is yet to be known but may challenge Eiffel Tower at 326m since the upper most level will serve as the observation deck and topmost will be the location of searchlights to illuminate at night time

/ 2 /

Can they build that icons tower in the huge lot between montane and Turf. It's better location and more in the center of bgc

20687153_470728313292378_134134727327508

Location for Icone Tower

picture2.jpg?w=1050&h=&crop&ssl=1

On 11th Street and 11th Drive - hmm. 11/11

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SERENDRA, in BGC - seems to have enduring popularity

jljqATB.jpg

Serendra One, from the Sky (or at least a high floor)

This video may help to show why

A walk through Serendra, Bonifacio Global City.

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Another price increase for Avida Towers Turf starting on September first.

All other Avida projects in BGC will now have the same pricing as Avida Turf.

As per facebook see link:

https://www.facebook.com/avidagoldwynlopez/?hc_ref=ARQsUjVLXDwMtGCYLNjpdctkMPhlGoxHGOxd-uga10nl35TcUciqu0IOl__lbAlcJDM

LATEST NEWS UPDATE:

Turf Tower 2 update:

Heads up!

1. Foreign allocation for Turf T2: 27 units to go as of today
2. Price increase for all Bgc projects by Sept 1.
3. Turf 2 will have 5% price increase and all other BGC projects' price will be aligned with new Turf 2 price. Parking is also included.
4. ALL AVIDA LAND PROJECTS:
SEPT 1,2017 INCREASE IN OTHER CHARGES:

1BR - approx 132K increase
2BR - approx 180K increase
3BR - approx 200K increase

PLEASE READ CAREFULLY NUMBER 3.

Last chance to catch the old price!
Invest in Ayala Land start with AVIDA!!!.
Reservation is Only 20,000.pesos.
1br /36sqm/28k monthly
2br/55sqm/45k monthly
3br/60sqm/ 48k monthly

FYI!The Last Tower of Avida Land Corp in BGC!!

AVIDA LAND CORP. ( an AyalaLand company ) Offers Condominium, House & Lot Projects and lot only. Invest when everything is with in your reach in every Development ( near Hospitals, Hotels, Malls, Offices and Restaurants/Retail Shops )

Investment Wise! Location Wise! Maintenance Wise! And Expect High Value Investment Appreciation!

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

 

How bullish? Well according to this salesperson, extremely bullish.

Excerpt:

Expect High Value Investment Appreciation!

 

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That site has found a new way to advertise property, it seems.

But how reliable is the data there?

Property Price/SQFT Gross Yield Ranking Submarket
Avida-Towers-Verte-1
Avida Towers Verte

₱14,487
PHP

8.2% Sold Out Taguig City
Avida Towers 34th Street 2

₱15,654
PHP

6.22% Sold Out Taguig City
Park Triangle Residences 2

₱18,785
PHP

6.68% #15 Taguig City

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 BGC Uptown "Transport Hub" :

This article has an interesting Footnote
Megaworld to build 25-storey tower for JPMorgan Chase Bank  /

jpmorgan-chase-image.jpg

" The new development, strategically located along 38th Street corner 9th Avenue in Uptown Bonifacio, is a few meters away from the future Uptown Transport Hub beside Kalayaan Avenue, the proposed Skytrain monorail system that connects Taguig’s Fort Bonifacio to Makati, as well as the future Kalayaan Station of the Mega Manila Subway and the Fort Bonifacio Bus Rapid Transit System. "

> more: https://www.megaworldcorp.com/megaworld-build-25-storey-tower-jpmorgan-chase-banks-philippine-global-service-center

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ART - OR CON ART ????

https://www.skyscrapercity.com/showthread.php?t=2125418

And a warning.

 

"Don't wet your pants just yet hm.gif

OLX is not that a reliable source for example it still lists park suites tower 1 condos at 180,000 per sqm I think the initial pre-selling price. They are also selling condos with take over payment options meaning that some poor guy has paid for a few years but fallen behind on payments and are willing to let go without compensation. 

This is very worry some to me as it means that the future owners cant sell those condos even at the low pre-selling price they got 3 - 4 years back. 

As long as I can get rental income to cover the mortgage interest I will be fine though but I suspect a lot of people will suffer when all of this inventory turns over and the main business around are call centers which is minimum wage.

 

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...when all of this inventory turns over and the main business around are call centers which is minimum wage...

Right, and experienced Call Center working might get P30-35,000 per month in BGC or Makati. New hires make less. maybe P18-20,000

If they spent 1/3 of their income on Rent, that's P10-12,000 per bed for experienced people, and maybe P6-7,000 for new hires.

If they pair up, they might pay rent of just P15-25,000 month for a studio or 1BR.

This is NOT a decent return for someone who spends P5-6 Million or more for a studio or 1BR.

The numbers do not work on these expensive flats at P180-200k in BGC, unless the owner is targeting a different sort of tenant - but where are they??

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BGC -- the devil is in the details. (in colliers report)


Dr Bubb, how accurate are the rental price data reported in the latest 3Q2018 Colliers report? Could it be that Colliers is "massaging" the rental numbers because when I look at the lower bands of rents received, it is really worrisome what I saw. For the Avida projects in BGC, it looks like the rental rates have decreased about 15pct yoy. If you then add 5 to 6 pct general price (like fi food) inflation, then BGC investors are facing a massive 20pct decline in purchasing power.

When I look at the ads on rentpad for selected BGC Avida buildings like Avida 34th, Citiflex, 9th Ave and Verte, then I am seeing prices more or less as the following

Unfinished flats 1Br approx 600php/sq meter, Finished 1Br approx 800php/sq meter

Unfinished flats 2Br approx 500php/sq meter, Finished 2Br approx 700php/sq meter

When I calculate the yield, and I assume a purchase price of PHP100K / square meter, then for a 2BR unit, the gross yield will be close to 5pct, net yield perhaps 4pct. For 1Br units, the yield will be 0,5 to 1pct higher. But PHP100K was the norm until the middle to end of 2013.

From mid 2016 to late 2016 prices ballooned higher to PHP180K and later PHP200K, and net yields are now probably 2pct. Anyone who is paying more than PHP200K per square meter is going to be "grilled" alive. (and there are still greater fools out there)

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The questions I now have.

+ How does Colliers gather rental data? Maybe they are just guessing these numbers.. That is my idea.

+ When will the pain stop for BGC investors?

+ Will it spread to other districts?

+ When will the primary market crack? Because interest rates have just been raised again in PH to 4,5pct for the discount rate i believe,

so commercial lending rates are now probably close to 6 to 6,5pct? 1pct to 1,5pct net yield for new projects in BGC really are no match for this, so when will the market face reality? When will we start to see developers face problems with unfinished and unsold inventory?

 

 

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Very Good Questions, ECB.


Here's a quick response:

F1.jpg
I Call BGC : "Fantasy Island". The developers want to sell you their dreams.

It is a great a modern place for those who both Live and Work there,
but if you have to "leave the island", and commute in or out, it can be a nightmare.
Rents come down to Supply and Demand.  And the Supply of flats in BGC has skyrocketed.
Demand has not kept pace, so rents are under pressure.
(Even so, those rents-per-sqm that you are quoting are Very Low, like the Boni-Shaw area.)
When I looked at the data over the past 2-3 years, it seemed conceivable that the completions
of so many offices in BGC over the last year or two, might bring in enough new tenants to fill
the new condos and keep rents at healthy levels.
Evidently, new businesses are not so eager to move into those new office towers.
Perhaps they are not ready to relocate to Fantasy Island and leave their employees who live
outside BGC with a daily commuting headache.
Over time, I see this getting fixed, and businesses gradually move in.
But BGC sorely needs better transport links. I am glad I saw that problem,, and did not buy there

(In a Jan 2017 post, above, I wrote):

"Amazingly, the market seems to be absorbing P 150k-162k prices in BGC and Makati.

But I do wonder if investors are going to be disappointed when they try to rent their flats out."

 

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(comment from a Viber chat):

just take a look at the number of avida condos for rent in BGC

> https://www.olx.ph/all-results?q=avida+bgc+rent

DrB:

BGC: OLX shows many Avida 1BR units
Typically: P28k-35k for 36-37sqm, thus, P777-946psm
If you need an 8% Gross yield on those numbers,
you would not pay more than P117k -142k psm*. (vs P200k+ asked maybe)
I think the problem is that so many of the Avida Condos
have been turned over at the same time. More jobs are needed in BGC

Note:

P117k x 36sqm = P 4.2 Million

P142k x 37sqm = P5.25 Million

 

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https://www.olx.ph/item/rush-sale-and-for-rent-avida-cityflex-bgc-executive-studio-ID8kx3f.html?h=b7476991be

I have seen this ad for quite some time. There have been close to 1000 views so it has been around for quite some time,

yet, despite it being one of the lowest price "resale" properties on the market, it has trouble getting sold.

(Avida cityflex is a SOHO type condo, and location wise located on the fringe of BGC -- and the finishing of the CITIFLEX units

was extremely limited, with f.i. vinyl flooring), but it indicates that the psm resale price for this unit is probably 10pct below

what the owner is asking; like PHP125K to PHP130K psm. This resale price is a far cry from the official prices.

 

https://www.olx.ph/item/avida-cityflex-bgc-semi-furnished-1br-for-rent-ID8znp6.html?h=b6d5975f14

An unfinished unit for rent in CITIFLEX. PHP25K for 50 square meters. That is just PHP500 psm.

This rental price is UNIMAGINABLE in PASAY/MAKATI.

 

In 2019 there is still 8,000 units that are going to be turned over in BGC, so the pain will last for another year.

 

My idea is that the market in BGC will therefore recover in 2020 when there is less supply in BGC.

Also in 2020 the SKYTRAIN that connects BGC with MAKATI will open, and that will have a big impact on both BGC and MAKATI.

For MAKATI, in 2020 you're looking at 16,000 new units in all of Makati, plus the fact that BGC will become an attractive alternative destination should Makati become too expensive with the help of the SKYTRAIN. The SKYTRAIN will further lower the rental rates in MAKATI (already under pressure by this 16,000 unit increase in Makati), so Makati will get some hits, and the beneficiary of the skytrain will be the BGC unit owners because eventually BGC and MAKATI rents will converge to each other. BGC rents will start to rise in 2020 while Makati rents will start to fall. 

Lastly, you forgot to mention that the BAY AREA is also an ISLAND. Also a "fairy tale" island, - "the city of dreams" and the BAY AREA has not been hit by lower rents, yet. And because it will not be connected to the new underground metro, and no skytrain, there might be a chance that rents will stay elevated for quite some time. 

It will now be interesting to see where the second trainwreck - in terms of rental rates - will manifest itself. Either Makati or the Bay AREA.

 

 

 

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Yeah, adding insult to the "BGC" injury, here's another ad with a unit for sale in Avida Citiflex.

The psm is only PHP130K. - A far cry from the PHP200K+ official price.

https://www.olx.ph/item/rush-sale-most-affordable-unit-in-avida-cityflex-bgc-ID8zs4M.html?h=a214f5332c

 

Is the market spiralling down? Are interest rate rises starting to take their toll on the market?

 

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I think it is just "the heat coming out of the market"

cloud_factory.jpg

Secondary market prices, for keen sellers, are back to where the primary market was 3-4 years ago.

People are selling at breakeven - if they bought 3 years ago, or at modest losses to cover transaction costs.

Why?

Maybe because they were not buying for own use, and they are finding it tough to find tenants at decent rental levels.

High interest rates mean that present Rentals are cash-flow negative*.

Having said that, those who bought at high prices in the last year or so will suffer some genuine financial pain

===

*From the Ad: " who doesn't want to live in Avida Cityflex?! (the seller, apparently.)

With executive studio unit only for 4.7M pesos,

it suits a corporate milllenial or a starting family. Fret not, with 36.96 of space."

Assuming you can rent at P800psm, that's about P30k a month = P360k per annum.

That means 7.65% Gross Yield,  and maybe 5.65% after estimated expenses - ie under 6% Net Yield.

At that level, you will have a loss on anything you borrow. So even at the low price, not so attractive as an investment.

But not so bad for own use. Better than buying new at P180-200K

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