Will you pay P2.3B for a house in Forbes Park?

ABODE OF THE UBER RICH Forbes Park with the Makati City skyline —Contributed photo

In 2012, a certain property in posh Forbes Park was sold to a popular celebrity for P388 million. In 2020, just when the COVID-19 pandemic was disrupting businesses, the same property was put on the market for a whopping P1.5 billion. In 2021, the selling price was raised further to P2.3 billion.

From a layman’s perspective, a P1.5-billion asking price for a single-family residence seems exorbitant. But looking at the property with valuation lens, property consulting firm Colliers says major components can be broken down to try to make sense of its price tag.

Prior to the COVID-19 pandemic, land prices within Forbes Park already ranged from P450,000 to P500,000 per square meter. Considering the aforementioned property’s 2,000-square-meter lot area, the land alone can cost P1 billion.

For the cost of the house, Arcadis Construction Cost Handbook 2021 estimates that the construction cost of high-end detached houses in the Philippines can range between P93,408 and P158,414 per square meter floor area. As the property has a floor area of 1,525 square meters, the house alone can cost around P242 million.

Considering the above computations, the mansion may cost around P1.24 billion—not far from its initial P1.5 billion asking price.

Buoyant luxury real estate market

Named after William Cameron Forbes, American governor general of the Philippines from 1909 to 1913, Forbes Park caters to the Philippines’ ultra-rich families and individuals. Wedged between the Makati central business district and Bonifacio Global City, it is also the residence of choice of many expatriates and foreign diplomats. Local listings websites show that monthly leases of houses in Forbes Park start at P600,000.

Amid the pandemic, the luxury real estate sector has been more resilient compared with other residential segments, which exhibited some correction.

While many ordinary Filipinos suffered financial losses during the pandemic, the Philippines’ richest people did not suffer as much. According to Forbes magazine, the collective wealth of the 50 richest Filipinos even rose by 30 percent in 2021 to $79 billion, with more than half of them increasing their wealth.

“Forbes Park caters to the Philippines’ top 1 percent,” says Colliers senior director of valuation services Paul Vincent Ramirez. “As the fortune of the target market of luxury properties was undiminished in the wake of COVID-19 pandemic, the segment has shown resilience.”

Ramirez also notes pandemic-driven changes in buyer preferences as ultra-rich city dwellers plotted their move to the suburbs, which offer properties with larger spaces, within secure, gated communities, and easily accessible to all daily amenities.

“It remains to be seen, though, if the changes that fueled the shift during the pandemic are permanent or merely a reaction to an extraordinary circumstance,” says Ramirez.