Osmeña: South Road Properties is a gold mine

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By Antonio V. OsmeÑa
Estatements

THE 2,872,369-square-meter South Road Properties (SRP) of the City of Cebu, assuming that the tract of land is planned as a commercial or light industrial development and that, under the highest and best use, it appears best to subdivided and area into 1,000-square-meter lots.

Assuming further that the balance of the land is devoted to streets, traffic isles and other public uses, then it presumed that a typical development will be done, such as water mains, sanitary sewers, street grading and cement paving, curbs and gutters and other costs, including survey, legal, filing, sales, brokerage, overhead, and cost of raw land should show the developer’s profit.


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Assuming again that the total saleable area is 2,010,658 square meters and the selling price is at P25,000 per square meter, then the possible gross income of the project will amount to over P50 billion.

If the selling schedule is properly programmed, then the selling price could go beyond P35,000 per square meter.

It is unfortunate that politicians are putting down the SRP when, in fact, the citizens of Cebu City are the legitimate owners of the reclamation project.

It is the responsibility of Mayor Tomas Osmeña as chief executive of the city to make the SRP profitable.

It is also the responsibility of all concerned citizens, including politicians who are against Mayor Tom, to support and recommend positive suggestions to make the SRP successful and not allow it to happen at the North Reclamation Projects’ political influence of destruction.

Some of our politicians do not realize the great amount of work and expenditure that are required to “produce” land even in a modest urban or suburban development.

Often inaccurate or unfair references are made to the seemingly large spread existing between the developer’s land costs on a per hectare basis and his asking price per square meters of a lot.

The analysis of development costs reveal that 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.

Although it is difficult to set forth with accuracy specific development costs that will apply to all the various economic areas of the region, an attempt has been made to set forth concrete measures of the kind and amount of expenditures which may be anticipated when subdividing and developing a project area.

Caution, however, needs to be exercised in accepting peso expenditures as typical or representative.

Cost, obviously, will vary with lot and street width, population density, kind and number of utility services, and mode and quality of development improvements.

Mayor Tom’s consultants at the SRP should provide information to the public of such problem so as to determine the highest and best use of the land, to prepare and submit alternate subdivision and development plans, to ascertain by market analysis the prices which the developed sites would command, and the price or value per hectare of the land.

Whenever land is to be allocated to competing uses, care must be taken so as not to violate the economic law of “highest and best land use.”

Since the highest and best use is always determined by the present worth of future rights to income or amenities, consideration must be given to the existence of demand for the use and purposes to which certain sites are dedicated in the overall subdivision plan.

Because business properties are known to bring a much higher price per unit of land, it is a common error to over-provide the amount of space required for commercial use.

Simply designing an area as a business property does not make it one. There must be a demand for business property and that demand, generally, is in direct proportion to the number of people or better, to families, residing in the area.