Due Diligence: Real Estate Development

In addition to an acceptable package detailing the projected use of the property, associated costs, and future cash flow projections the following issues need to be addressed in depth as well:A. PROPERTY / TITLE
Maps, locations, and overview items
Current ownership and control
Current title holder
Property title documents / last search
List of encumbrances, liens
Restrictions, easements, covenants, etc. running with the land
Leases, contracts, ordinances etc. associated with the propertyB. LAND USE ISSUES
Municipality and other governmental entity with jurisdiction over the property
Current zoning and necessary changes to existing zoning
Construction permits and filing procedure
Identify necessary agency permits
Current permitting turnaround timing
Current Official / Master Plan designation and status
Local infrastructure studies exhibiting sufficiency for project
Failed / successful / ongoing projects in the areaC. ENVIRONMENTAL ISSUES
Former uses of property
Past environmental issues and fixes
Past environmental investigations
Additional environmental studies required
Contiguous property environmental issues or concernsD. TAX / LEGAL
Any and all ongoing / pending actions or events
How the property has been taxed in the past
Referendums / actions to raise taxes
Is owner / seller an individual, partnership, trust, corporation, limited liability company, etc.
Does seller have authority to convey property and title
Actions or events involving current / past owners
Settled legal actions or tax eventsChristiansen (1996) suggest the following to be included in any feasibility study: – Site description – Market research – Financial Feasibility Analysis – Planning Layouts – Risk AssessmentUnderstand that development of raw land into lots suitable for construction is a complex process. Therefore a proper due diligence requires detailed input from experts. “Forecasting is an imprecise art at best and projected cash flows if not carefully prepared can result in totally misleading forecast.” (Sorensen, 1990)

Top Investment Opportunities in Manila Real Estate

Recognized as one of the most powerful markets in the Asian properties sector, the Philippine real estate industry is driven by a healthy economic growth that is fueled by a robust influx of direct foreign investments. Investor confidence in the Philippine properties sector can be directly attributed to reforms initiated and implemented by the country’s government. In addition, the Philippines has been able to achieve a high GDP rate in spite of global recession and one of the reasons behind this is an active construction industry and high amount of OFW remittances. Apart from that, good credit ratings achievement and political stability has also helped to create a viable economic environment. As a result, investor and buyer confidence is at its peak, and demand for office space in major business districts in Metro Manila, the country’s national capital region, is on the rise, along with demand for residential space and condominiums. Majority of the buyers in the Philippine real estate industry also recognize that investment in real estate is an excellent means of building up assets and wealth and that a keen eye for choosing the right location of properties to put an investment in determines the viability of such an investment. For good investment opportunities in Manila real estate, the following business districts are seen by many as a good pick:Makati CBD
The Makati Central Business District serves as the financial center of the Philippines and plays host to several multinational corporations. As the oldest business district in the country, Makati CBD is home to the highest percentage of companies looking to have an office space in this prestigious location. Because of the high density of corporations looking to lease office space in this area, premium office space yield range from 7.5% to 11%, respectively.Ortigas CBD
The Ortigas Central Business District is known to have the lowest vacancy rate for premium office space, which runs at 3.6%. Compared to Makati, Ortigas offers a better rate which can get as much as 30 – 35% lower. The same is true for residential space that are available in the area. Since Ortigas is in the middle of Metro Manila, it has the added advantage of being more accessible to employees of corporations holding office in the area. The facilities available in this location is the same as those that can be found in Makati, making it a more viable option for those who are looking for a top notch business location.Fort Bonifacio
Also known as Global City, Fort Bonifacio currently has the highest rate for both price and yields for office and residential space, more particularly for condominiums, with prime yields running between 6.0% to 8.0%. This area has an increasingly high level of real estate activities, which indicates that both investors and buyers are willing to locate in the area despite the higher costs.Entertainment City
Entertainment City Manila, officially known as PAGCOR Bagong Nayong Filipino is an ongoing development within an 8 square kilometer strip in the Manila Bay Reclamation area. Apart from the major companies that have tied up with the government to develop the area, various investors and developers have ventured into real estate business in and around Entertainment City. Apart from catering to local demands for residential living space, the current real estate activities in the area is also in anticipation of the projected tourism boom after the Entertainment City has been completed.Alabang CBD
Alabang in Muntinlupa City is known as one of Metro Manila’s foremost business and financial districts. The area’s development as a business center traces its way back in 1970’s when a renowned real estate developer and business conglomerate in the Philippines started to develop a vast section in the locality as a premiere residential hub, developing along with it a business park, thus providing an excellent incentive for businessmen to relocate and do business in the area. Other developers has since then took notice of the potentials of Alabang as an excellent location for investment in top industries. As of date major players in the BPO industry, real estate industry, manufacturing industry, as well as many other sectors have business interests in the locality.