KMC MAG: Recent bid for BGC lot will not result in new benchmark prices
Property Consultant KMC MAG Group Inc. said the recent
bid prices for tow properties for the state-owned pension fund
Bonfiacio Global City (BGC) will not result in new benchmark prices
in the area.
Antton Nordberg, KMC manager for consulting and research, said the
bid of about P500,000 per square meter (sq m) for the two 1,600
sqm properties of the Government Service Insurance System (GSIS)
should be treated as an outlier and not a benchmark of prices, at
least for now.
Nordberg compared last year's bidding of 8,300 sq m of property
owned by another stateowned pension fund, the Social Security
System, which only fetched a price of P280,960 per sq m.
"The 'fair market value' of the land would settle to around
P290,000persqm, which is the closest estimate to the current market
value or for this specific lot," he said in a document sent by
email to the BusinessMirror on Friday.
"The fact that the major developers in the country-Megaworld
[Corp.] and Ayala Land Inc.-did not participate in the bidding
shows that their CFOs [chief financial officers] possibly
recognized that these prices would artificially push the values up
the rate ceiling, which is not beneficial in the long run as it
puts the country at greater risk into a property bubble," he
Share prices of both Megaworld and Ayala Land surged at their
highest, after the GSIS received a bid of P800 million for one of
the 1,600sqm property, or 54 percent higher than the floor price
of P520 million, or P325.000 per sq m, earlier set by the pension
The other GSIS property of the same size fetched a bid of P732.8
million. Megaworld owns chunks of land in the former military camp
in Taguig City, while Ayala Land is the developer of the entire
"Either way, justifying this price would involve a lot of
speculation on market performance and rates going up.
"In spite of the promising property market, an investor still
needs to exercise caution and justify if a 21percent price
increase is rational, or if it can be justified by the
fundamentals," Nordberg said.
At the moment, the ongoing market value per sq m in BGC stood at
about P140.000 per sq m for office and P130,000 for residential. At
this rate, Nordberg said the prices of the endproduct-or the
building or fa- cility that will be built-will be no more than 21
percent. He said that for an investor to take on profits out of a
P500,000persqm lot, he would have to sell the endproduct at
P170,000 per sq m.