Price/Sqm

Here's how to PROPERLY calculate the price/sqm for condos.

Calculating the price/sqm is useful so investors can clearly compare one property to another. Similar to how US groceries are mandated to declare the price per ounce, it allows investors to have apple-to-apple comparisons of properties.

For example, if they were calculated directly without separating the parking from the unit, units with two parking slots would be significantly more expensive per sqm, while units that didn't have a parking slot would be the most affordable.

To effectively compute the price/sqm, one has to separate the price of the unit/ from the cost of the parking.

The question then is, how much should we value the parking? Should we use the market price? The developer's price? The zonal value?

Those who wish to lower the price/sqm would typically use the highest of the three–the market price. For example, parking slots in One Shangri-La Place sell as high as Php4 Mn. So brokers would calculate the price/sqm of a Php20 Mn, 100 sqm unit by deducting the Php4 Mn from the price (to get the cost of the unit) and dividing by the floor area. This computation results in Php160,000/sqm–which is incredibly cheap.

However, one should use the zonal value for uniformity because it is the information available to everyone. Again, the purpose of calculating is for everyone to see eye-to-eye. The zonal for the parking is Php1.5625 Mn, which results in Php184,375/sqm–a 15% difference from the initial computation. Not so cheap, apparently.

What about pre-selling condos that haven't turned over but have zonal values?

In these cases, it would still be apt to use the zonal value of the parking slot. Typically, developers allocate parking slots to be evenly distributed among units (e.g., studio units can't have more than one parking slot). For this reason, buyers, in theory, could only buy parking slots in the secondary market (if allowed).

What about houses? To be continued in the next post...