June 14, 2021

Understanding the real value of RFOs

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Investing in a condominium unit has long been considered as one of the best sources of passive income.
Apart from the fact that you have a tangible asset, gains can be had in two ways—through rentals that will give you additional monthly income and through capital gains as prices of condominiums have been seen to appreciate over time.
But the question many ask is: do I buy the pre-selling or ready-for-occupancy (RFO) units? There are equally compelling merits to both options, but if you want to immediately enjoy the benefits of your condo investment—whether as an end-user or as an investor—RFOs would be the way to go.
Based on estimates of Colliers Philippines, there are some 14,879 condo units classified as RFOs out of the 42,511 remaining inventory in Metro Manila as of end 2020. While there a number of options in the market, the key is to choose which of these units can offer you a strategic location near essential establishments, a well built structure, exceptional finishes as well as choice amenities that can provide you or your lessee with a healthy, relaxing environment.
A smart choice will allow you to reap the gains and benefits offered by the Philippine real estate industry, which managed to remain resilient amid the pandemic.
Data from the Bangko Sentral ng Pilipinas showed that the nationwide residential property prices recovered in the fourth quarter of 2020, as based on its Residential Real Estate Price Index. It reported that house price growth reverted to the positive territory as RREPI rose by 0.8 percent year-on-year, and by 2.4 percent quarter-on-quarter.
Global Property Guide also reported that the estimated rental yield for a 120-sqm residential space in Metro Manila, with a buying price of P23.5 million and a monthly rental rate of P120,131 stood at 6.13 percent in 2020, despite the challenges of the pandemic.
Colliers meanwhile believes that recovery is in the offing.
Read more: Inquirer