COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT)
Engr. Raul T. Punzalan
VALUATION OF CONDOMINIUM UNITS COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan REPUBLIC ACT NO. 4726 June 18, 1966
CONDOMINIUM ACT
AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND GOVERN ITS INCIDENTS. COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the "condominium corporation") in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas. COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan DEFINITION OF TERMS
"Condominium" means a condominium as defined in the next preceding section.
"Unit" means a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part or parts of floors) in a building or buildings and such accessories as may be appended thereto. COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan "Project" means the entire parcel of real property divided or to be divided in condominiums, including all structures thereon.
"Common areas" means the entire project excepting all units separately granted or held or reserved.
"To divide" real property means to divide the ownership thereof or other interest therein by conveying one or more condominiums therein but less than the whole thereof. COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan A condominium project can be defined as a vertical subdivision on a parcel of land and a multi-storey building structure erected thereon.
A condominium project can be a residential, commercial or industrial project .
The unit-owners enjoys a fee simple ownership on the unit and enjoys a common ownership (with the other unit-owners) on the land and the common elements of the building. COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan Major documents associated with a Condominium Project which the appraiser should be familiar with are: Condominium Certificate of Title (CCT). Master Deed and Declaration of Restrictions. Articles of Incorporation and By-Laws of the Condominium Association or Corporation. House Rules and Regulations. Deed of Sale and/or Contract to Sell COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan Condominium Master Deed and Declaration of Restrictions Description of the land or lot. Description of the building structure. Description of the condominium units. Statement of the nature and interest required in the units and common areas and whether title to the common areas is to be held by the condominium corporation. Purpose for which the building and condominium units are intended. Survey plan of the land. Diagrammatic floor plans of the building and units and their relative locations and approximate dimensions. Any reasonable restrictions in the rights of the unit owners and the condominium corporation not contrary to law, morals or public policy. COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan ADDITIONAL FACTORS AFFECTING VALUES OF CONDOMINIUM PROJECT OR UNITS
Location relative location to center of activity, relative location of the unit within the project. Classification residential, commercial, industrial, Type of Unit regular, corner, single level, with loft Size floor area is ideal to its utility or highest and best use Layout floor plan lay-out Highest and Best Use maximum potential of property is realized Design architectural, floor lay-out, building features Depreciation condition, physical wear and tear COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan VALUATION METHODS
Whether the appraisers assignment involves the valuation of a condominium unit or several condominium units, or the entire condominium project, the three approaches to value can be applied.
The three approaches to value Market Data Approach Cost Approach Income Approach COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan VALUATION OF A CONDOMINIUM PROJECT
Land: 900 sq. m. @ P60,000 P 54,000.000 Bldg: 7,560 sq. m. @ P24,000 181,440,000 Bldg ME: 7,560 sq. m. @ P 6,000 45,360,000 Swim. Pool 6,000,000 Spa & Gym 5,000,000 Development Cost P291,800,000 Plus: Admin. Cost: 3% of Devt. Cost P 8,754,000 Selling Expenses: 5% of Devt Cost 14,590,000 Cost of Borrowed Money: Devt Cost x 60% x 12% x 2 years 42,020,000 Developers Profit: 30% 87,540,000 Total Cost P444,704,000
Net Floor Area: 6,048 sq.m.
Average Selling Price: P444,704,000 / 6,048 sq.m. = P 73,500 per sq.m.
Based on market research, going prices of condo units in the area ranges from P70,000 to P75,000 per sq.m. Therefore, project is feasible. COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan VALUATION OF A CONDOMINIUM UNIT BY MARKET DATA APPROACH SUBJECT DATA 1 DATA 2 DATA 3 PRICE ??? P 8,234,000 P 7,600,000 P 8,900,000 SIZE (SQ.M.) 124 132 128 125 FLOOR / LEVEL 2OTH 18TH
19TH 12TH
FINISHES GOOD GOOD GOOD GOOD FLOOR LAYOUT GOOD BETTER GOOD GOOD AMENITIES GOOD GOOD POOR BETTER ADJUSTMENTS: SIZE 5% 0% 0% FLOOR / LEVEL 3% 0% 5% FINISHES 0% 0% 0% FLOOR LAYOUT -5% 0% 0% AMENITIES 0% 10% -10% TOTAL ADJUSTMENT 3% 10% -5% ADJUSTED PRICE P 8,481,000 P 8,360,000 P 8,455,000 COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan VALUATION OF A CONDOMINIUM UNIT BY INCOME APPROACH
The value of a condominium unit is the present worth of the rental income plus the reversion value of the unit at the end of lease contract. Rental Income: 124 sq. m. @ P350 per sq.m. per month x 12 months P 520,800 Present Worth Factor as annuity for 5 years at 10% x 3.79079
Present Value of Rental Income P 1,974,200
Plus: Reversion Value of Condominium Unit Value of Unit at end of contract x present worth factor 124 sq.m. @ P 60,000 per sq.m. = P 7,440,000 Present Worth Factor (lump sum) x 0.62092 P 4,620,000 Indicated Value P 6,594,200 COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan
Documented History of PhilRES' Recognition and Accreditation As The Sole Accredited and Integrated Professional Organization (AIPO) For The Real Estate Service of The PRC