AGING condominium buildings in Makati’s central business district could offer redevelopment opportunities for property companies following Congress’ ratification of legislation seeking to ease approval requirements for older properties, according to real estate consultancy Leechiu Property Consultants, Inc. (LPC).
LPC said the proposed Condominium Redevelopment Act could allow developers to redevelop aging buildings on potentially valuable land by addressing voting requirements that have made redevelopment difficult.
“Much of the affordability talk nowadays is about building new inventory. But there’s the real opportunity inside our existing urban areas, in aging condominiums specifically,” LPC Analyst for Investment Sales Miggy Galvez said during the firm’s recent third-quarter property market briefing.
The Senate on Oct. 8 ratified the bicameral conference committee report on Senate Bill No. 2420, which reconciled its provisions with House Bill No. 2286.
The measure seeks to amend Republic Act No. 4726, or the Condominium Act of 1966, by updating rules governing the maintenance, repair, reconstruction, redevelopment, and dissolution of condominium projects.
Mr. Galvez said the existing requirement for unanimous consent among condominium owners has been a major obstacle to redevelopment.
“If you want to redevelop the condominium, you would require a unanimous vote. [For example] with 100 owners, if 99 of the owners say yes for redevelopment and one says no, there’s not going to be any redevelopment that’s going to happen,” he said.
Under the Senate-approved version discussed during LPC’s briefing, the approval thresholds would depend on the age of the condominium building.
Buildings less than 30 years old would retain the unanimous approval requirement, while those aged 30 to 50 years would require the consent of two-thirds of stakeholders. Buildings at least 50 years old would require a simple majority.
The proposed legislation also includes provisions on condominium corporations, amendments to master deeds, tax exemptions for certain common-area transfers, and safeguards for unit owners.
The reconciled measure also provides options for liquidating condominium projects, including selling the entire property or distributing liquidating dividends to shareholders, according to Sen. Francis G. Escudero, who sponsored the legislation.
Mr. Escudero said unit owners would be entitled to an advance on their share of the sales proceeds, subject to agreed valuation and payment terms, if the property is sold.
MAKATI REDEVELOPMENT POTENTIAL
LPC said the potential impact of the proposed reforms would be concentrated in established business districts, particularly Makati, where a larger proportion of buildings is aging compared with the broader property market.
According to the consultancy’s third-quarter property market report, its building inventory covers 2,090 properties across the broader market, including 237 in the Makati central business district.
The report identified Makati as a potential area for redevelopment, citing the age of existing buildings and opportunities to reposition properties in established commercial locations.
“This isn’t a market-wide redevelopment story yet. It’s concentrated in mature CBD areas, such as Makati, where a meaningful share of the stock is approaching the age where redevelopment gets easier,” Mr. Galvez said.
He said the proposed legislation could provide developers with a clearer mechanism for redeveloping older condominium properties, including sites that may be underutilized relative to their potential value.
“A clear redevelopment mechanism, such as the Condominium Redevelopment Act, makes those assets more investable and lets developers recycle underutilized sites,” he said.
Mr. Galvez said the proposed reforms could provide opportunities for property redevelopment even as developers face elevated construction costs, financing expenses, and affordability constraints.
LPC said slower economic growth, higher inflation, and borrowing costs continue to weigh on property transactions, while household purchasing power has struggled to keep pace with property prices.
The consultancy said these conditions have limited developers’ ability to reduce prices and constrained demand for new residential properties.
“So while the management environment constrains new demand, policy reform can unlock value from the existing stock that we already have,” Mr. Galvez said. — Juliana Chloe A. Gonzales