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Buying a Condo in the Philippines

Buying a condo in the Philippines has never been more appealing. It has become a necessity more than just being a trend particularly for those working near or within the central business districts. It’s the only home for young professionals while a second home for overseas Filipino workers (OFWs). Some treat condo ownership as a lucrative property rental business – a definitely worthy investment. From mid-rise to low-rise condo buildings, the choices are now aplenty.

Before you invest your hard-earned money, educate yourself about the condo market in the country first.

What you need to know about buying a condo in the Philippines

What is a condo?

A condominium, or condo for short, may refer to a large property complex (i.e. a residential building) divided into individual units. A condo also refers to a single, individual unit. When you buy a condo, it is not the unit that you are buying, but the ownership of that unit. You will receive a Condominium Certificate Title (CCT). The CCT is the final document that transfers the property under your name. The CCT will not be transferred until the price is fully paid.

Nonetheless, you, as the condo owner, may owe, rent or sell the ownership of that unit. But, you also need to share with upkeep expenses specifically those of the common properties within the condo building.

A condo building is managed by the condo management while the condo unit owners or renters are a member of the condo association.

Condo ownership under the Condominium Act

While a Filipino may own a condo, he or she cannot sell it to a foreigner. However, under the Republic Act No. 4726 or the Philippine Condominium Act, a foreigner looking for residential or commercial property has the option to own it. The foreign individual must not own the land where the residential building is built.

The Act’s provision on absolute ownership of a condo leads to the sales increase. According to CBRE, expatriate purchasing is one of the main drivers of condo sales in the country.

Buying a condo

If you are planning to buy a condo, there are several factors to consider. After all, it is a major purchase; perhaps one of the biggest decision you’ll ever make in your lifetime. And no, the price should not be your main focus.

1) The purpose of buying a condo

Apparently, the most important consideration would be the purpose of owning a condo. Are you a 25-year-old professional who is ready to move into a home you can proudly call your own? Or, are you a semi-retired employee who is looking to add an investment that you may liquidate in the near future? A condo in Makati central business district and Bonifacio Global City appreciates in value faster than their suburban counterparts. The value may increase from 5.1 to 6.3% in the coming years. The purpose must be clear even before you start scouting for the right condo for you.

2) Your short-term needs

A probable short-term need is a necessity of living near your workplace. Do you want to buy a condo while staying here in the Philippines for three to five years? Are you planning to go abroad to work in the next couple of years? Are you planning to change careers soon? Thus, buying a condo gives you the flexibility of having a permanent residence, renting it out if you are no longer using it and selling it so someone else can use it.

3) Your long-term goals

If you are going to settle here in the Philippines, perhaps marry and start a family, buying a condo is also advisable. However, some experts advise that if you are not going to live in the property for less than five years, it would be best to just rent a condo unit or an apartment. You won’t be able to maximize the returns on your investment if you will not live in the condo that long enough.

4) The price you can afford

When looking for the condos that you can afford, don’t forget to take into consideration the location of the residential building. The prices will differ depending on the location. For example, a condo in Pasig City costs around Php1.5to Php3 million while a condo in Novaliches may cost around Php1.4 to Php1.7 million. The same goes with the required down payment. It is usually between 10 and 20% of the total price of the condo.

Further, a condo located near MRT also tends to be more expensive per square meter than a condo located far from it. Not to mention, there will be notable differences in the cost of living. Your goal is finding the best condo unit that your money can afford.

There are other costs involved such as the condo association fees, value-added tax (VAT), and closing costs. The association fee is payable right after signing the CCT. Make sure that the price already includes the 12% VAT. The closing costs which cover document stamp duties and transfer taxes are payable by the owner, too. These are paid either after 30 days of making the deposit or the sale completion.

Importantly, you should know if you have the capacity to buy the condo. The rule of thumb is spending only 30% of your monthly income on household needs including monthly repayments. Hence, consider setting a budget and sticking to it when shopping around.

5) The unit types you prefer

Condo units are not created equal even if they are contained in one building. Mostly, this is about the floor area and its exact location. A bigger area may mean the integration of more features. More features may also mean higher prices. If it faces a grand view, the price will also differ. Even so, a condo normally costs from Php1, 000,000 to more than Php10 million. There will be slight variations in amenities and features and hence, the prices. Again, your choice will depend on your current needs and future goals.

6) The facilities you want

These are the common properties. The numbers of accessible facilities on the premises also affect the price of the condo. If the condo you are eyeing has a state-of-the-art gym, then you might no longer need to pay for an annual membership to the nearby gym. Other important things to consider are the building security, parking area, and storage space. The bottom-line, consider what facilities you need now and will be needing in the future before you decide which one to buy.

7) The developer of your choice

Always look for a residential building that is backed by reputable developers in the Philippines. This is more so if you are going to buy a pre-selling condo. It’s still off-plan which means that the condo building is yet to be built.

Buying a condo in the Philippines can be a daunting process. But, if you are somehow aware of the condo buying process, it won’t be as intimidating as you thought it would be.

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