Condominium units make promising investments due to their high annual appreciation rate. Also, they are generally more affordable and easier to maintain than houses.
Amidst the COVID-19 pandemic, the appeal of living in condos seemed to remain, with sales increasing by more than 22% over the previous year.
But what about the next few decades? Are condominiums a good investment for the long term? If you find yourself thinking about these questions, here are some factors you need to consider.
Condominiums as an Investment
Equities or stocks, bonds, and mutual funds are some of the most popular investment choices. However, real estate is also a profitable investment due to its tangible nature and high yields. Plus, unlike with other assets that could result in significant losses, your ROI could remain steady.
Moreover, in comparison to other types of investments, you don’t need to have a huge amount of cash on hand to purchase a condo unit. Leveraging is a notable real estate investment strategy. It lets you borrow money to buy a property from a bank or other financial institutions. Still, before using leverage, be sure that the property is worth your money, time, and effort.
Condominiums are a popular investment choice in the Philippines. They are substantially more affordable than houses. They can also provide the owner with a stable, passive income through rental.
Additionally, condos are less costly to maintain, considering that they are being managed by associations. Condo owners also share common facilities and amenities with their neighbors. These include parking spots, pools, gyms, and recreational facilities. Such amenities attract renters, especially since city-dwellers value convenience and ease of access.
Most condos nowadays are constructed using modern techniques and long-lasting materials, so you don’t have to worry about your condo’s excellent condition for the long haul.
According to Colliers Philippines, the average price of a condominium unit is approximately Php550,000 per square meter. However, this value can significantly vary depending on the city in which the property is located. For example, Makati is Metro Manila’s most expensive condo market.
Reasons to Invest in a Condo Unit
Strategic placement equals increased demand and resale value
Condo buildings are expected to maximize developer profits. This being said, the location is everything in real estate.
To attract buyers, developers build their condominiums close to a variety of businesses and lifestyle establishments. Top developers frequently construct condos in commercially active, mixed-use, and master-planned communities to cater to both residential and commercial markets.
A strategically placed condo attracts a demographic that is keen to live close to conveniences, which pretty much sums up most modern city-dwellers. Therefore, as long as you choose the location well, you can expect that your unit will never stay vacant for long should you choose to lease it.
Condominiums are frequently marketed before they are completed. During the pre-selling stage, developers offer substantial discounts, flexible payment terms, and the ability to select the location of your unit and customize it to your specifications.
With these benefits, purchasing during the pre-selling stage allows you to significantly increase your investment returns. As a result, it is prudent to evaluate real estate ventures that are still in the planning stages.
Because even the younger working class are now interested in buying condos due to their appeal, developers have begun to build complexes to match all income levels. There are luxury condos where wealthy investors can make large profits. Similarly, there are low-cost projects that provide prime rates, adaptable payment terms, and in-house financing, among other perks. Investors can discover better offers and lower rates in the condominium industry as compared to houses.
Safe and Secure
Condos are generally safe investments due to their high appreciation rate. However, aside from that, it’s also secure in the legal aspect. There’s a lot of protection for buyers, granted that they will purchase from a legitimate developer.
It pays to work with trustworthy real estate agents who can help you understand all the terms of buying a condo. They will also advise you on the required paperwork or purchasing property documents.
Condo owners benefit from sharing the cost of building maintenance with their neighbors. Still, because the majority of condominiums on the market are relatively new, there is frequently little to be done in the way of maintenance.
High rental return
Real estate investments offer a high rental yield, which is the return on investment before taxes and other maintenance bills. In Asia, the Philippine real estate rental yield is at 6.13%.
The Key Takeaway
Any real estate purchase will always have benefits and downsides tied to it, and condos are no exception. On the plus side, condo units boast affordability and the potential to let you earn passive income.
On the other hand, you should carefully consider the various aspects of owning a condo unit such as the shared amenities in a condo complex, space limitations, and so on.
The key is in striking a balance between the pros and cons, so you can make an informed decision about investing in a condo.