Articles
Why Investing in a Pre-Selling Condo Can Be a Smart Move
By : Sofia Mendoza
Date Published : October 26, 2024
5 min read
Investing in real estate, especially a pre-selling condo, can offer unique advantages, particularly in a fast-growing market like the Philippines. Here’s why a pre-selling condo might be the best route for maximizing returns and securing a valuable property asset.
1. Lower Initial Cost
Pre-selling condos are generally sold at prices 10-30% lower than ready-for-occupancy (RFO) units. For instance, a pre-selling condo in a prime area like Bonifacio Global City (BGC) might be offered at PHP 17.5 million during the initial sale, compared to PHP 25 million for an RFO unit upon completion. This lower entry cost allows buyers to own prime property without the premium cost.
Tip: This approach is ideal if you want to invest in a prime location within a manageable budget.
2. Higher Potential for Property Appreciation
The value of a pre-selling condo typically appreciates over the construction period. For example, a pre-selling unit bought for PHP 17.5 million could appreciate to PHP 25 million or more by completion, yielding a capital gain of up to PHP 7.5 million. This appreciation is particularly robust in high-demand locations and near infrastructure projects, where property values increase as accessibility and demand rise.
3. Flexible Payment Options
Pre-selling condos come with flexible payment schemes tailored to the buyer’s needs. Options often include a small reservation fee followed by installments throughout the construction period, with some developers offering 0% interest for extended payment terms. This structure makes ownership feasible without a large initial outlay.
Example:
If the unit costs PHP 17.5 million, you might only need a PHP 50,000 reservation fee, followed by monthly payments until turnover, which helps buyers secure a unit without straining their finances.
4. Customization Opportunities
Buying a pre-selling unit early often comes with the chance to customize interiors, from layout choices to finishes, making your home uniquely yours. Customization also enhances rental appeal for investors, as tenants are often willing to pay a premium for unique or high-end finishes.
5. Access to Prime Locations and New Developments
Pre-selling condos are typically located in up-and-coming areas with strong growth potential. For example, many pre-selling condos are being developed along Manila’s major thoroughfares or near new transportation hubs. Investing early means owning property that will likely appreciate as new infrastructure, malls, and business hubs are completed nearby.
6. First Choice of Units
As an early buyer, you get first dibs on premium units within the development. You might select a unit with a preferred view, higher floor level, or ideal location within the building, features that will likely command higher resale or rental rates.
7. Enhanced Investment Opportunities for Rentals
Metro Manila's rental market is growing, driven by demand from students, professionals, and expats. Once completed, a pre-selling condo in a strategic location can generate rental income, with high-value locations like BGC and Makati often yielding attractive rental returns.
For instance, a 1-bedroom unit in BGC might rent for PHP 40,000-50,000 per month, offering consistent cash flow for investors.
Risks to Consider
While the benefits are attractive, it’s important to be mindful of potential risks:
• Construction Delays: Always work with reputable developers with strong track records to avoid project delays.
• Market Changes: Economic conditions or oversupply can impact property values, so studying market trends is key.
• Developer Dependability: Look into the developer’s portfolio and reviews to ensure they deliver on time and with quality.
Key Tips for Investing in Pre-Selling Condos in the Philippines
1. Research the Developer: Opt for developers with a reliable history, like Ayala Land, SMDC, or Megaworld.
2. Assess Future Developments: Investigate surrounding infrastructure projects that could increase property value.
3. Understand Financial Obligations: Review payment terms and look for pre-selling promos, such as introductory discounts.
4. Visit Model Units: Visualize the space by touring any available model units to set realistic expectations.
Conclusion
Investing in a pre-selling condo in the Philippines is a strategic approach to real estate, providing a blend of affordability, appreciation potential, and customization. Although it requires careful planning and an understanding of the developer’s reliability, the potential rewards—from capital gains to rental income—are considerable. Whether you’re a first-time buyer or a seasoned investor, a pre-selling condo can be an accessible, high-potential choice for expanding your real estate portfolio in the Philippines.
