Written by Marc Adrian
The population in the Philippines has already crossed the 100 million mark, and providing shelter to every Filipino has become a challenging feat. To cater to this demand, low-cost condominiums, townships, and subdivisions are sprouting up throughout the country in the past years.
This current real estate boom is the result of a massive housing backlog which is estimated to be between 3 and 5.5 million housing units. It doesn’t look like this trend will stop anytime soon as real estate developers have started to expand further outside Metro Manila for their big projects.
With the scarcity of landed houses in key areas such as Metro Manila, high-rise units have seen a tremendous growth in popularity especially among the younger population.
Given this overall optimistic sentiment, property hunters could make a purchase without stretching themselves too thin. The only predicament that most find themselves in nowadays is choosing which type of property to purchase. Choosing the right location and budget constraints aren’t the only factors to consider anymore when one shop for a property in the Philippines.
If you’re torn between choosing a landed home and a condominium unit, here are the pros and cons of both.
The real value of landed houses
When buying a landed property, you not only get the house, but also the whole piece of land where the house is built on. The primary reason for buying a landed property is the freedom of owning a piece of land. With this comes an array of possibilities for your home.
Of course, one of the factors that is taken into consideration is the spare land areas that could be used to improve the quality of living, such as landscaping it into a beautiful front yard garden, or turning it into a productive backyard mini-orchard, or simply making it into a recreational space for the children and house pets. The potential is endless.
Better appreciation rate
From an investor’s perspective, however, landed properties generally appreciate better in the long-term, compared to high-rise properties. Land tends to grow scarce as development and resident population quickly catches up. Thus, the larger the population, the more rapid the development will be, and the more expensive prime land will costs. Not to mention, the cost to reuse former high-rise land will always be higher than the cost to reuse lands that once were landed property (houses or structure less than 2 or 3-story high).
Longer property life expectancy
It doesn’t matter if you’re a house buyer or an investor. It is common knowledge that the property life expectancy of a landed property will definitely outlive those of a high-rise property.
The selling point of condominium or high-rise properties
While landed properties provide more financial sense to invest in, their drawbacks are easily what condominiums are known to be good for.
This is the strongest point for most high-rise properties, particularly lifestyle or resort-style living condominiums. The levels of security in high-rise properties are usually stricter than that of a landed property – from multiple tier access card features to 24/7 security monitoring. Condominiums can easily provide better security compared to a gated community.
Condominium developments often provide access to certain amenities that wouldn’t be practical or affordable for an individual house owner. Clubhouses, golf courses, swimming pools, tennis courts, fitness facilities and even the actual location – such as a beachfront property – can be much more affordable when shared by a group of owners, rather than by an individual property owner.
Maintenance is another factor. For a condominium, owners will have to pay maintenance fees every month to keep up the maintenance of the property, which includes facilities like gym and swimming pool, as well as any external or internal repairs.
For a landed property, there is no need for maintenance fees, but the owner will have to make sure all the maintenance are done on their own – their yard, the pipes, and sewage system.
This aspect can be considered as a luxury when buying a landed property, thus landed properties can get ridiculously expensive if they are within these cities’ prime areas. A condominium unit, on the other hand, could be just half or even one-third of the cost of a landed property in prime areas.
Price, investment, and appreciation
A landed property is typically more expensive than a condo because of its size and also the land, especially in a desirable neighborhood or area close to prime locations. Condos have a very wide price range. Lower-range condominiums are often within the budget of first-time buyers and start-up families. Properties of the same price are usually located in less desirable locations.
Price is a fundamental factor when choosing a property. If you’re looking to move into the key cities in the country, here’s a glimpse of what to expect.
|Location||Median price of landed houses||Median price of condominium units|
|Makati||₱ 135,013,320||₱ 7,305,097|
|Quezon City||₱ 9,792,519||₱ 3,224,761|
|Cebu||₱ 6,161,082||₱ 5,104,329|
|Davao||₱ 6,162,143||₱ 3,140,751|
If you’re in it to invest, the annual growth rate will give you a quick idea of how much you’ll be reaping in the long term.
|Annual growth rate|
The key feature that makes property investment attractive is its potentially higher total return, accrued from rental income over the long-term. It is a less volatile investment as it can rely on income return by having the property leased out instead of purely capital value return (through capital appreciation).
Here are the median rate for rental prices across some of the key cities mentioned above.
|Median Rental Prices|
|Makati||₱ 240,919||₱ 57,602|
|Quezon City||₱ 87,491||₱ 21,753|
|Cebu||₱ 84,412||₱ 30,878|
|Davao||₱ 32,173||₱ 24,283|
Key considerations when buying a home
Real estate provides a very rewarding return on investment if strategically planned, but there’s more to it than purchasing the first decent property that you see. With the current economic climate, there’s no shortage of properties with ideal attributes to choose from. Although this is good for providing more options to buyers, it makes choosing the right property slightly more complex.
Here are the most important factors you need to consider when you are shopping for a property:
Purchasing a property is a huge and long-term investment. That’s why the first thing to consider before buying any property is your debt to income ratio.
While it’s most likely that banks or Pag-IBIG will be financing your property purchase, they do come with a (almost) lifelong (30 years maximum) repayment. So, it’s not really a good idea to borrow the maximum amount that they offer because eligibility and affordability are two different things.
Ask yourself this: If you purchase the property, will you still have enough funds for your other financial obligations and daily essentials?
2. Convenience and amenities
Real estate is truly about location. It’s common knowledge that the nearer a property to industrialized and business districts, the more expensive it will get. Also, landed properties are more expensive than a condominium unit in developed areas such as Bonifacio Global City, Makati, and Cebu due to land scarcity.
Furthermore, most condominiums offer amenities like pools, playgrounds, function rooms, and gyms that you can’t find in most landed properties. Also, they provide tighter security as they also have 24-hour security and on-call maintenance, on top of building maintenance. However, these come at a cost, where residents have to pay a monthly maintenance or association fee, ranging from ₱50 to ₱100 per square meter.
3. Brand new vs sub-sale property
While sub-sale properties are more affordable and are likely to be in strategic locations, they also require more scrutiny than a newly built and dispersed property. So, before jumping the gun, inspect the property and its surroundings thoroughly. Will it cost you more money to do a renovation than buying a newly developed property? Weigh your options first.
Should you buy a condominium unit or a landed house?
In a nutshell, a condominium unit is a perfect choice if you value convenience and accessibility over a bigger space and a peaceful neighborhood.
If you’re eyeing a property at a business district in any of the developed cities, it would make financial sense to go for a condominium unit. These properties are just a stone throw away from the city center, and they are more affordable compared to landed properties. However, if you don’t mind commuting or driving for a good 15 minutes to an hour to and from the city center, you can find many more affordable landed properties outside the business districts.
For high-level executives who want to be located inside business districts, condominiums are a good option as they get to live closer to the workplace, resulting in shorter travel time and transportation expenses. Meanwhile, landed houses are more appropriate for professionals who are starting a family.
It will be a different story for investment because it can vary depending on your goal. Do you prioritize capital appreciation which could take years to decades, or do you want monthly rental income? Finding a property that can answer any of those questions can vary from one place to another.
If it is capital appreciation, a landed property can be a good investment option; but if it is rental income, high-rise condominiums are mostly popular among renters for their lesser entry fee and deposit. Then again, this will depend on where you’re buying the property.
Ultimately, choosing between a condominium unit and a landed house boils down to your end goal. Both have their own merits, but they cater to different types of needs.