Why Condos Are Good Long-Term Investments
The Philippines is one of the Southeast Asian countries with the highest population growth rates, according to Commission on Population and Development (POPCOM) Undersecretary Juan Antonio Perez III. Due to this, the government, non-governmental organizations, and real estate companies are constantly building new homes to keep up with the demand.
With the rise of the country’s population, the popularity of condominiums as real estate investment is also moving up. Investment volumes are expected to rise by 15% to 21% in 2021. In addition, big-ticket infrastructure projects, like the Cavite-Laguna Expressway (CALAX), LRT-2 East Extension, MRT Line-7, Skyway SLEX Extension, can boost the real estate market, especially nearby developments.
If there’s a good time to invest in condos for the long-term, that’s today. To give you more insight on why purchasing a condominium is an excellent long-term investment, we’ll discuss the reasons below.
Do Condos Appreciate?
Like with any piece of property, condos, in general, appreciate. Condo prices in Metro Manila have a history of a steady increase throughout the years. In 2016, the average value of 3-bedroom luxury condominiums rose by 9.95% year-on-year. In 2018, the growth was at 15.55% year-on-year, which is an increase of around Php200,000 per sqm.
While the pandemic did have a significant impact on the prices of condos, Colliers International expects a market recovery in 2021, saying, “The government’s vaccination program is providing a glimmer of hope, and economic recovery should also provide a much-needed boost to local investor and end-user demand.”
Aside from the current economic climate, several factors also affect a condo’s value appreciation. But, its main factor is the location.
If the condo is located in a prime location, like in a central business district, there is no doubt that its value will appreciate over time. Condo buyers such as local professionals, High-Net-Worth-Individuals (HNWIs) from overseas, and upgrading families are always on the lookout for a home situated in an accessible neighborhood.
5 Reasons Why Condos Are a Good Long-term Investment
They are located in prime locations
Most condominiums are located in prime locations in a city’s urban areas, with the most premiere condominiums being nestled in a township or a community development. This gives the occupants easy access to essential amenities like retail establishments, health facilities, leisure spots, and transport hubs.
If you’re an investor, you should look at the project’s accessibility to these amenities as this is desirable for most people. Another thing to keep an eye on is planned or ongoing infrastructure developments in the area, as it is a good indication that the location is thriving. Therefore, it is best to invest in a condo in these locations as real estate prices are likely to appreciate in the future.
They don’t require constant external maintenance and repairs
Maintaining a condo unit is a breeze as the condominium corporation’s property management arm will handle the day-to-day repair and maintenance of the external and common areas of your property. With this, your time and effort is freed up to work on the things that truly matter in real estate investing: looking for tenants, and growing your property portfolio.
They are protected by 24/7 security
Aside from external maintenance and repairs being taken care of, the condo’s management is also in charge of property security. With a condo, you don’t have to hire caretakers or be on alert for vandals. Condo buildings have 24/7 enhanced security with CCTV cameras, fire sprinklers, and smoke detectors ready for emergencies.
They are more affordable to buy than house and lot
While the price of condos varies depending on their locations and level of amenities, they are still generally more affordable compared to traditional houses and lots. Apart from the initial investment, the running expenses are lower since repair and maintenance costs are shared by condo owners and tenants. You can also expect to pay lower property taxes. All of these perks make condominiums the perfect vehicle for beginner real estate investors.
Their amenities are a good pull for renters
From pools, gyms, green spaces, and recreational areas, condominiums offer a wide array of amenities that occupants will find desirable. Moreover, these amenities are easily accessible from any point in the project, making them convenient to go to.
With your condo having these attractive amenities, it’ll be easy for you to pull in renters s. High-quality amenities are in demand for tenants, and if ever a renter moves out, the vacancy is likely short-lived.
What Happens to Your Condo After 50 Years?
Many people believe that condominium buildings are only good for 50 years and that after the 50th-year mark, the property will be bulldozed. This is a myth. While it is true that the condo must be in existence for 50 years to be declared uninhabitable as per The Condominium Act, two other prerequisites need to be met before the property can be partitioned off to its owners:
- The condo must be obsolete and uneconomical. The condominium is uninhabitable because it has significant signs of wear and tear, and the area is no longer a prime location due to the economic shift.
- Condo owners are opposed to any repairs, restoration, remodeling, or modernizing of the property.
If all these factors are ticked, that’s the only time that the condo building will be declared uninhabitable and will be considered for demolition or selling. If your condo ever comes to this point, all owners are entitled to a portion of the sale’s proceeds, meaning at no point will your ownership be relinquished.
Beyond the Present: Make the Right Investment
Investing in a condo for sale in the Philippines provides long-term real estate opportunities as many prime locations are still developing, and the workforce is still young and growing. As a real estate investor, you must always take a strategic view of your potential investments.
Research and financial planning are essential if you want to make long-term returns. Look into properties with high investment potential like the high-quality condos of Federal Land.
Federal Land, the leading real estate company in the Philippines, has well-built properties located in key cities in around the country. Let our knowledgeable real estate professionals assist you in your investment journey.