To do this, you have to look at the cost of the developed property that consists of land cost, construction cost, and profit margin of the owner. So investing in a land means that you are participating in a derivatives market, so it allows you to either speculate or hedge.įirst, we need to calculate how much the exit price should be for an investor to make his profit or exercise his option. Rather, it is an option: you may opt to develop the land and sell it at higher price later on (exercise the option), meaning, you are locking the future price today. We have provided a couple of rule of thumb calculations that will help us determine if the price is justified and whether it is a good investment.Īs we know, land is not an income-producing asset such as stocks or an office building. Last year (October 2013), the Social Security System (SSS) sold its BGC prime lot (located close to the lots in question) at a mere Php 277,000 per sq. However, this might not be enough to justify how the price skyrocketed by 80% in a year. They are located right in the heart of BGC, a few meters away from major retail developments (The Fort Strip and Bonifacio High Street), as well as high-rise offices and residential buildings. Sure, the prices can be justified by virtue of that fact that the lots are in a prime location. This got us wondering: are the prices too much? The offer price for its other BGC lot is not far off, reaching Php 458,000 per square meter or Php 733-million. Last Tuesday, the Government Service Insurance System (GSIS) received a record-breaking Php 500,000 per square meter offer for one of its prime lots in Bonifacio Global City, Taguig, equivalent to Php 800-million.
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