The pros and cons of living in a condominium

Posted at 9:06 pm September 09, 2010

Tags: Consumer Goods and Concerns, OFWs, Real Estate

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By Alexander Villafania

QUEZON CITY, METRO MANILA – Home ownership is one of the main goals of Filipinos. Metro Manila, with its 12 million inhabitants, is already being filled up with a lot of developments, particularly condominiums.

Places like Bonifacio Global City in Taguig City, the Eastwood Cyberzone in Quezon City, and Bay City in Pasay City are among the latest large-scale real estate development zones that are quickly being filled up with condominiums buildings.

Condominium living is not really a new trend in the Philippines but demand has been increasing lately, driven by new money from the growing business process outsourcing industry (BPO) and purchases made by Filipino overseas workers or (OFWs).

Many employees from BPO companies, in particular, choose to rent condominiums in groups. Since they work primarily in the evenings, they want to have the convenience of working closer to their offices. Trade websites such as Sulit.com.ph and OLX.com.ph have sections for contact center employees looking for condominium units to rent.

OFWs also have been purchasing condominiums with the intention of selling them at a higher price upon turning over the unit from the developer, or to have them rented out to office workers. Many websites, like the blog forum OFW Friends Online, have queries from OFWs and their families looking to buy real estate properties, particularly condominiums.

Living in a condominium both has its pros and cons. It entails a lot of responsibility that comes along with its primary advantages. While condominiums give certain convenience of staying within a specific area that has all the basic amenities, they are also somewhat costlier if they are in prime areas.

Here are just a few of the things to know when deciding to get a condominium unit:

Location and convenience - Condominiums can allow a person to live within convenient walking distance to malls, groceries, banks, utility firms, places of worship, schools, and even work. The lesser distance traveled to these places, the less time and effort are used. This makes for better productivity.

Cost – There are real estate developers or condominium administrators who offer units for rent. Cityland and Phinma are some that offer rent or rent-to-own units, which could start for as low as P7,000 a month. Many condos are also rented out by their owners, with the intention of passing on the cost of the monthly amortization, thus provide some short term investment potential to the original owner. Some condominium developments are also competitively priced against other real estate projects, such as townhouses and even full house and lots, within the metro.

Privacy – Condominiums are somewhat tighter as tenants are just in the adjacent units, separated only by a few inches of concrete. However, building rules require tenants to keep down noise levels, which make it fairly tolerable for those who want some peace and quiet.

Of course, there are distinct disadvantages to living in condominiums both for short term and long term:

Small, unexpanded space – Because of the limited space allocated per unit, there is little to no space enough to expand. Condos are typically for single people, couples, or those starting a family. However, a growing family would also require bigger space, which puts a condominium at a disadvantage.

Fees - Apart from the monthly rent or amortization, condominium tenants have to contend with monthly association dues, which could be charged on a flat rate of at least P1,000 or based on the size of the unit. These will go to overall maintenance of the entire property. Overtime, the fees could go higherdue to inflation. Always ask for the monthly break down of how the fees are being spent.

Low long-term investment value – While some consider owning a condo as a long term investment, physical depreciation and certain taxes (capital gains tax, real estate tax) have to be shouldered by the owner before an actual sale is done.

This becomes both a physical and financial burden to the seller. There is also the issue with the 50-year lifespan of condominium units, as stated under Republic Act 4726 or the Condominium Act. While individual condominium units could lose their value overtime, the land where they stand could be acquired for a much higher value, which can still be a possible investment, provided that there are buyers.

There are many more complexities of living or owning condominiums. Those who consider them must know what their intentions are and how long they intend to use them in the long run. The value of a condominium is still based on how a person sees their property. A little real estate knowledge could go a long way.