How Air Rights Work in Real Estate and Other Application

Hey, did you know that properties not only have rights to the land they're on but also to the air above them? It's called "air rights". This gives the property owners the legal right to use the airspace above their property, usually up to a certain height limit.

Developers can buy or lease these air rights from property owners to build above an existing structure or in previously unused airspace. This is super useful in cities where there's not much land to go around, and it's expensive. Basically, air rights could turn into money.

What are Air Rights in Real Estate

Especially in the case of condominiums, air rights can be used to add more floors to an existing building, increasing the number of units available for sale or rent. For example, a developer may purchase the rights above an existing three-story building and build three additional stories on top, effectively doubling the number of units available for sale.

This can be a lucrative investment that brings in more money for developers as the cost of acquiring air rights is often much less than the cost of purchasing a new property. It then creates an overall increase in the attractiveness of a certain building.

Here's the thing, buying or leasing air rights can be a little controversial. Some people think it's a fancy way of gentrification that could push out people or businesses that are already there. They worry that it could lead to the destruction of historic buildings or ruin the views from other properties. A condo in the Philippines and around the world would be worth more when air rights are taken into consideration.

In a Philippine Daily Inquirer article written on August 6, 2012, it was briefly discussed how buying air rights was becoming the new buzz at that time in the real estate industry. In fact, KPMG Center (The former Prudential Bank Building) sold to Alphaland the equivalent of four unused floors from its 16-floor area ration entitlement. This means that if they decide in the future to tear down the current building and build a new one, it has waived the right to build anything taller that will block Alphaland's current view.

Other Applications of Air Rights

This is not just about real estate development; air rights have other uses too! For instance, they can be applied to the construction of bridges or tunnels over or under existing buildings or for the installation of overhead power lines or other infrastructure. In some instances, air rights can even be used to construct entire cities on stilts. Singapore and the Netherlands are some places where this idea has been proposed. In some cases, cities may even require developers to provide affordable housing or other community benefits in exchange for the right to use air rights. In this way, services for the community is still provided by real estate companies which are also employers.

Do all properties have air rights? 

Just to clear things up, this is not applicable to every property out there. Sometimes, the rights to the space above the property are owned by someone else entirely, or they might not exist at all. It all depends on a bunch of things, like local zoning regulations, building codes, and any easements or restrictions on the property.

Here are a couple of things to keep in mind. If a property owner wants to sell or lease their air rights to a developer who wants to build a property that is taller than the other, the developer gets the air rights while the property owner still owns the land. But, there are some situations where these rights don't exist at all or are limited by zoning rules or other restrictions. Some cities have height limits that make it tough to use air rights in certain areas. If you're a property owner or developer looking to build, it's really important to look into this before doing anything. That might mean talking to real estate pros, checking the local regulations, and getting the right approvals from the local authorities.

Money, data-driven decisions, prices, and the benefits

Despite the potential benefits, it requires cash and the extent to which the budget of a developer sees the capital value appreciation or how the top management would qualify the income it would contribute in the long run. Companies' need for data will always be typically a crucial element in the sense that the expected income requirement, prices, or budget must be worth it because of the high inflation. The forecast of the inflation rate in the Philippines was at 5.8%, which is something for people to still think about.

Just a heads up, getting or selling air rights can be a real hassle with all sorts of legal and regulatory hurdles to jump over. So, it's a good idea to get some help from a professional who knows their way around real estate and the market. They can give you advice and support along the way to make sure everything goes smoothly.

Property owners can use air rights to make the most of their land, while developers can build more in crowded cities where land is limited and pricey, so they would also factor this into their budget. But remember, it's crucial to follow local rules and regulations to make sure everything goes smoothly. It pays a lot to have the best professionals work on the processing.

How does a company purchase or sell air rights

Buying or selling air rights can be a bit tricky and different amongst areas. Basically, you have to figure out what air rights are tied to a property, talk to possible buyers or sellers, and get the right permits and approvals from the local authorities. This could be a challenge because of the rising prices, core inflation, consumer price index, tight labor market, pay raises or salary budgets and the economy in general. Assuming that the economy is skyrocketing, inflation is at bay, and consumers have better spending, here are a few things to keep in mind if you're thinking about getting or selling air rights in a country.

1. Identify the air rights associated with the property.

Before beginning the process of acquiring or selling, it is important to understand the existing air rights associated with the property. Review zoning and building regulations, as well as any existing easements or restrictions on the property. Remember that this part is crucial to keeping the intended money to later on help combat the inflation rate instead of costing the company later by paying for legal damages.

2. Determine the value of the air rights.

Once the air rights have been identified, it is important to determine how much it would contribute in order to adjust companies' budgets and costs. Consult with appraisers or real estate professionals, and companies to assess the market trend of the air rights. This allows one to understand the point of the purchase.

3. Find potential buyers or sellers.

Depending on whether you are looking to acquire or sell air rights, you will need to identify potential buyers or sellers. Reach out to the government, developers or property owners in the area who may be interested in acquiring or selling air rights.

The turnout of these sales would help create a new market as the cost of gas, construction, wages or pay rises, taxes and other forms of spending has gone up. In other words, the demand for eligible buyers would depend on the industries' or countries' economic health.

4. Negotiate the terms of the sale.

Once potential buyers or sellers have been identified, it is important to negotiate the terms of the sale. Negotiate the price, as well as any conditions or restrictions on the use of the air rights. Remember that it works the same way as supply and demand. The economic conditions of an area could also help merit increases compared to other cities in terms of supply, living conditions, food availability, and other living expenses.

The labor market is also an integral part of understanding the income requirements it entails for a developer to afford invest in air rights, or is it simply due to societal pressure. Again, it boils down to further analyzing the economy as it makes more business sense to consider people's salaries and overall prices to see if they could afford to factor in the higher prices of real estate.

5. Obtain necessary permits and approvals.

Before the sale can be finalized, it is important to obtain the necessary permits and approvals from local authorities. It varies across countries and cities. Obtain a permit for the construction of a new structure or the addition of floors to an existing building. The Philippines has its own governing authority when it comes to housing and condominium.

6.     Close the sale.

After all the dirty work, once all necessary permits and approvals have been obtained, the sale can be finalized. Sign a contract or other legal agreement outlining the terms of the sale.

Vista Residences helps consumers combat the inflation rate by ensuring that air rights are taken into account. 

For more information on Vista Residences, email [email protected], follow @VistaResidencesOfficial on Facebook, Twitter, Instagram, and YouTube, or call the Marketing Office at 0999 886 4262 / 0917 582 5167.