Date: October 11,2023
With the Philippine economy defying the odds and achieving remarkable growth in 2022, many individuals are pondering the age-old question of whether to invest, particularly in the real estate market. In this blog, we explore the recent insights shared by Colliers, a renowned professional services and investment management company, during their "Resilient Investments" forum held in Makati City last February 22. The two expert speakers at this event discussed property value appreciation and forecasts for 2023, shedding light on the potential of the real estate market in Makati.
Economic Recovery and Property Acquisition in Metro Manila:
Joey Bondoc, Colliers' associate director for research, highlighted the positive impact of last year's economic growth on the property market, despite challenges like inflation. He reassured potential investors by pointing out the consistent interest in property acquisition, with notable transactions such as the recent price of approximately P1.19 million per square meter in Makati. The rise in land values in key areas like Makati, Ortigas, and Bonifacio suggests further developments across the capital. Infrastructure projects, such as the MRT and LRT expansion and the Mega Manila Subway project, are expected to play a pivotal role in boosting land and property values upon their completion between 2023 and 2030. Moreover, flexible payment terms offered by developers and the demand for facilities and amenities have made the prospects for real estate investment even more enticing.
Investing in Residential Properties: Less Volatile and High Yield:
Richard Raymundo, Colliers managing director, made a compelling case for investing in residential properties, particularly in the context of the Philippines' recovery from the COVID-19 pandemic. He highlighted three key advantages:
1. Less Volatility: Residential properties exhibit less volatility compared to other investment options.
2. Rental Growth: Rental prices for Philippine apartments have steadily increased over the years, providing a source of income for property owners.
3. Capital Appreciation: On average, residential properties in the Philippines have seen capital appreciation of around 10% per annum.
Raymundo emphasized the importance of considering location, developer reputation, and price when selecting a residential property for investment. A prime location, strong rental prospects, and a reliable developer ensure a wise investment decision.
The Debate: Renting vs. Buying a Condo:
For individuals working in central business districts like Makati, BGC, or Ortigas, the choice between renting and buying a condo in Manila is a significant decision. This section explores the pros and cons of each option to help readers make an informed choice.
Source: Real Estate RPH
Renting a Condo:
Pros:
- Easier to move in and out, especially for fully-furnished units.
- No property tax to manage.
- No need to deal with rent increases.
Cons:
- Rent increases over time.
- Deal with lease deadlines.
- No equity gain over time.
Buying a Condo:
Pros:
- Transform the space as you please.
- Gain an asset that grows in value.
- No need to deal with rent increases.
Cons:
- Requires a large sum to obtain.
- Selling can take a while.
- Deal with costs to maintain.
Considerations When Deciding:
Ultimately, the decision between renting and buying a condo hinges on various factors, including the financial aspect. Individuals should consider the following:
- How long they intend to stay in the location.
- The long-term financial benefits of owning a condo.
- The pros and cons of each option, including rent increases and equity.
Deciding whether to invest in real estate, particularly in Makati, is a pivotal choice in today's economic landscape. The expert insights and considerations provided in this blog shed light on the potential for property value appreciation and the advantages of investing in residential properties. Additionally, the debate between renting and buying a condo in Manila emphasizes the need for a well-informed decision-making process, tailored to individual circumstances and financial goals. Whether you choose to rent or buy, the real estate market in Makati continues to offer opportunities for those seeking a safe and potentially high-yield investment.
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