The real estate industry in the Philippines is booming, thanks to a strong economy and friendly interest rates that make it easy for young executives or families to invest. Condo units are particular popular as a “first home” or an additional source of income. Units located in commercial districts like Taguig City are always in demand, and property prices will always go up. Take for example, Megaworld Corporation and its ambitious townships located within Bonifacio Global City. These are world-class developments that epitomize the level of quality and standards Megaworld is known for.
However, a booming industry also attracts small developers that want to grab a piece of the pie. These developers don’t have the experience and resources to deliver on the glittering promises they make in their marketing brochures. That’s why it’s important for anyone who wants to invest in a condo to examine every deal before making such a big purchase. Here are some questions you can ask, red flags that signal that development is a risky investment, and tips on how to find a better deal.
Ask about the project timelines and issues with the city officials
If an agent mentions that they’re just “working out some details with the local government” walk away. If a developer is coming to conflict with city planning, it may have not met city codes, or does not have the prior experience and relationship to get the proper permits. Even if they do resolve issues, the project completion will be delayed, and your capital will be tied up. Each month that the construction calendar is extended is income lost. Worst case scenario: the construction could be halted altogether and you lose your entire deposit.
The safer investment is to pick a developer with extensive experience in building projects of the same type and within the same area. The safest investment of all is to enter the second phase of a construction project. For example, Megaworld at the Fort has already completed one building, ans is already pre-selling condos for the next.
Ask how many units have already been sold
If this is your first time to invest in real estate, take your cue from other investors. A condo unit that does not attract a lot of clients must have problems or red flags that you can’t see. Be particularly wary if the sales agent seems to be doing everything to get you to buy–dropping prices far below industry rate or offering incentives like a free vacation. A project should be able to sell itself.
Look for properties where initial phases sold very quickly. You are more secure that it has features that attracted smart investors who don’t rely on marketing gimmicks but figures and forecasts. Also research on how much investment is being put into the general location. For example, property experts believe that there will be a hotel boom in The Fort, since multinationals and embassies have set up office there. Hotels do extensive research before expanding; if they see the potential in the area, then you can bank on their knowledge and follow suit.
What will the building look like?
The model unit may look charming, but go beyond that and ask about “curb appeal” — how the unit, the building, and the general neighborhood will look. The style and reputation of a condo development affects resale value, the kind of tenants you attract and rental fees you can demand, and (if you happen to live there) how proud you’ll feel when you invite friends over for dinner.
Reputable condo developers will invest in good architects, interior designers and landscape designers to create world-class global properties. Don’t be afraid to ask an agent about a developer’s design team, and how they’ve invested in the facade and grounds. You should also ask for photos or brochures of past developments, which will give a concrete idea of the kind of standards they set for their projects.
What is the reputation of the developer and its properties?
Ask friends. Google. Check social media sites, forums, and blogs. Look at lifestyle magazines.
Publicity and public opinion may be subjective, but they can give you an idea of how easy it will be to rent out or resell a unit. Picking a little-known developer or an obscurely located development will mean that you have to work extra hard to convince potential buyers or tenants. O the other hand, a reputable developer in a premium location already gives you a marketing advantage. You can command a good price and a steady stream of clients because of the existing image.
How do the prices compare to other developments in the area?
If you find a development that is being sold at rock-bottom rates, light years away from the market and neighborhood value, stop. If something is too good to be true, it often is. You may be victimized by marketing, and suddenly face hidden costs when it’s too late to back out from the sale. Or the developer is scrimping on materials and labor, which will only lead to more costs later on when you replace or repair the shoddy fixtures. The property may also be attracting the wrong investors.
While there are development projects that target the middle-class buyer, reputable developers will still choose good construction materials and invest in improving the grounds. These may mean higher prices, but these reflect the quality of the property.
These questions are part of the “due diligence” that goes into any investment, so you weed out the marketing gimmicks and narrow your list of potential condo investments to the most trustworthy developers and most promising properties