The pandemic may have affected markets across the globe, real estate included, but as economies begin to recover, a resurgence in investing is likewise taking place. In a news article for BusinessWorld, Colliers, an international real estate firm that conducts market intelligence, observed a growth in e-commerce which is in turn “driving the logistics sector, technology, and on-demand services firms.” This in turn will impact real estate developers by introducing new opportunities in the “lockdown economy.”
Colliers further predicts a projected delivery of 7,270 new residential units in 2021. This accounts for a 21% increase from 2020. If you are looking to invest in a residential condominium in the Philippines, here is a checklist of what to look for.
What to look for when buying a condo in the Philippines
Return on Investment (ROI)
Several factors affect the ROI of a real estate investment. First, look into the annual income potential of the property. To get an idea of the fair market value (FMV), research online marketplaces for comparable condominium units. Take note of the asking rent for various units with the same size, features, and location. Most lessors will list rental rates that include monthly association dues which will be indicated in an online property listing.
Income potential is also affected by a property’s location, especially if this is next to areas with strong economic activity. This includes central business districts such as Makati, Bonifacio Global City, Ortigas Center or special economic zones. Such properties will command higher rental rates. Moreover, you increase your pool of prospect lessees, from solo professionals, to expats, as well as families.
If you need more help with researching fair market values, you may also consult with a real estate broker or a real estate appraiser who is licensed by the Philippine Professional Regulation Commission (PRC).
You must likewise account for the usual expenses of maintaining property. This includes monthly association dues, annual real property tax , property insurance, and the annual maintenance costs that come with normal wear-and-tear.
Finally, consider average vacancy rates. According to Jones Lang LaSalle, the third quarter of 2020 saw Metro Manila’s residential vacancy rates rise to 8.2 %. Conversely, the same quarter saw an improvement of take-up in completed developments, thanks to Philippine developers offering attractive payment schemes amid the pandemic.
Once you have computed for these expenses, you can get a better idea of your annual net income and the estimated years before you get a full return on your investment.
Annual Real Property Tax (RPT)
Under Republic Act 7160, which is also known as the Local Government Code, RPT is computed at 1% (for provincial properties) or 2% (for properties within Metro Manila) of the property’s assessed value. The assessed value refers to the property’s taxable value. Assessment levels are prescribed by Section 218 of this Code.
Real property tax accrues by the 1st of January and is due by the 31st. RPT is paid to your local government unit (LGU) that covers the location of your property.
You have the option to settle real property tax in one payment or four quarterly installments. The advantage of paying early and in full is a tax discount provided by the LGU.
Be mindful though that LGUs also charge an additional 1% for the Special Education Fund (SEF). SEF was created to fund education projects of the Philippine government.
Get smart about investing in a condo unit
When purchasing a condo unit, it pays to choose a property that will provide the best returns on your investment.
While investors will naturally work within a specific budget, which will dictate the unit type from open plan studios to four-bedroom properties and single-floor units to multi-level condo units, be mindful of other key factors that may influence your purchase decisions.
As discussed in the points above, the location of a property is key in its income potential. Is the development close to major thoroughfares, business and commercial centers, schools, places of worship, and hospitals? Are there plans for new infrastructure in its surrounding areas?
The reputation of the developer is another major consideration. Working with a reputable developer like Rockwell Land means your condo unit has better chances of attracting potential lessees. Not to mention, you will enjoy living in the property yourself if you opt to do so.
Investing in a condo unit located in a Rockwell development also has greater potential for value appreciation. This can be attributed to an impressive mix of thoughtful design, the community’s trademark exclusivity, safety and security; upscale amenities; and of course the signature Rockwell lifestyle.
Make your investment worthwhile with Rockwell International
With a range of well-appointed communities to consider, both within and outside Metro Manila, you can find a Rockwell community that suits your unique requirements, budget, and investment goals.
Choose from a beachfront property in Mactan, Cebu; a family home nestled within a lush provincial setting in Canlubang, Calamba, Laguna; a luxurious modern condominium in Makati, Metro Manila’s premiere business center; or an upscale home in a high-rise tower near some of the country’s premiere universities–among several other communities in the Rockwell portfolio.
Rockwell Land likewise offers property management services through Rockwell Leasing and Secondary Sales. With experts assisting you in the lease or sale of your property, you can get it to market faster and see your investment pay off sooner.
Make your investment worth it with a premium property at a Rockwell community today.