PHILIPPINE REAL ESTATE and RELATED NEWS in and around the country . . .
.
.

Osmeña: Development practices at SRP


Wednesday, June 2, 2010 [ sunstar.com.ph ]
By Antonio V. Osmeña

THE practice of subdividing and developing the South Road Properties (SRP), formerly known as the South Reclamation Project, intrigues many well-meaning people. In practice, the terms subdividing and developing are used interchangeably.
In Cebu City Mayor Tomas Osmeña’s logic, he seems to be interested only in the less intricate business functions of reclaiming the 300 hectares of foreshore land and selling them subdivided, retail.
However, there are others who are interested in going far beyond this initial stage of urbanization.
They seek to assume business functions that involve the creation of an entire development of “living” areas that will integrate effectively with the surrounding civic and cultural environment.
The partial sale of the SRP raw land to Henry Sy of SM and the Gotianun group clearly states the buyers shall undertake land improvements, in accordance with subdivision plans, and expenditures shall be borne by the buyer to provide essential site facilities.
Obviously, analysts expected the City of Cebu, as the owner of the SRP, to enlighten the city’s taxpayers of the existence of an updated comprehensive master subdivision plan. Taxpayers are primarily concerned, as to whether the two buyer-developers’ subdivision plans are well coordinated with the overall subdivision plan for all 300 hectares of the SRP.
Is there an approved subdivision plan for the kind of development offered? Or is the City leaving it to the buyer-developers to make their own subdivision design? The developing errors of the city’s North Reclamation Project, such as the storm drainage, sanitary sewers and water mains laid underground, have faltered because of the instability of the reclaimed land.
During high tide, the seawater seeps into the reclaimed land and the water pressure causes the underground concrete culvert mains to separate, if not properly done.
What worries analysts is that the buyer-developers might develop independent road networks, in the absence of an integrated, approved SRP road pattern, thus creating more traffic snarls.
However, since the city council has adopted the mayor’s logic of selling the SRP subdivided, using retail arrangements, the SRP administrator should see to it that land allocated to competing uses must not violated the economic of “the highest and best land use.”
Since the highest and best use is always determined by the present worth of future rights to income and amenities, consideration must be given to the existence of demand for the uses and purposes to which certain sites are dedicated, in the overall subdivision plan.
Business properties are known to bring a much higher price per unit of land, so it is a common error to over-provide the amount of space required for commercial use.
Simply designing an area as a business property, however, does not make it one.
The city’s 160-hectare North Reclamation Project has been reclaimed, developed and fully sold since the early 1970s.
It was conceptualized as “a city within a city” commercial center.
Today, after 40 years, the north reclamation has deteriorated, with its heterogeneous mix of use, because the original land use restrictions imposed by then mayor Serging Osmeña Jr. were scrapped during martial law.
Only in exceptional instances can an urban area be subdivided and developed without the aid of borrowed funds.
The two SRP buyer-developers that have acquired raw land represent not more than 15 percent of the entire development costs. The need to secure the remaining 85 percent poses a financial problem.
To succeed in marketing the SRP lots, the buyer-developers need to introduce improvements such as water mains, sanitary sewers, street grading and asphalt or cement paving, curbs and gutters.
They must also assume other costs such as survey, legal, filling, sales, brokerage and overhead. It is further assumed that the cost of installing electricity or telephone utilities could be negotiated with the city.
The planning commission needs to have the strong political will to impose land use restrictions, especially in the routing of road arteries. An analysis of development costs reveals the sale price of a site in an average development must yield three to four times the cost of the raw land, if the undertaking is to prove financially successful.
It will take a tremendous lot of talent for the SRP buyer-developers to recover their investments, because of the high cost of constructing over reclaimed land.
Published in the Sun.Star Cebu newspaper on June 2, 2010.
___________________________________________________________

real estate central philippines
Copyright ©2008-2017