Condo investments show strong returns

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There’s little room to doubt claims that real estate is one of the safest investment options today.

Having gone through several boom-bust economic cycles, Philippine real estate has shown resilience, posting record high levels in take up, supply, prices and land values especially over the last decade. As the numbers would show, real estate, when held over the long term, can yield stable and lucrative returns, generate attractive capital appreciation, and to a certain extent, preserve wealth.

Today, even amid the pandemic, the real estate industry continued to show resilience. Despite the slowdown in take-up, nationwide residential property prices rose by 27 percent in the second quarter according to the Bangko Sentral ng Pilipinas’ Residential Real Estate Price Index. This was the highest year-on-year growth rate recorded since the start of the series in 2016. By area, residential property prices in the National Capital Region registered a 34.9 percent hike.

Residential condo for sale

Highest premiums

Indeed, cities in the capital region continue to be an attractive real estate market.

However, homebuyers and investors will only get to reap the benefits if they know how, where and with whom to invest. As a rule, the best real estate investments are usually those that enjoy a strategic location, proximity to other components like commercial centers, schools and offices, as well as those that are part of a bigger integrated development.

A study by Leechiu Property Consultants on the real estate market of Las Piñas City would in fact attest to how properties that are near or within a mixed use project enjoy better premiums and appreciation than those located farther.

Data from LPC showed that the highest premium is enjoyed by condominiums within walking distance—or 360 meters—from SM Southmall, as these are priced 68 percent higher (on a per sqm basis), compared to those 600 m to 1 km away. At present, condominium units have the highest price among residential developments in Las Piñas, hitting as much as P260,000 per sqm.

The LPC study also revealed that investing in mixed use developments such as SM Southmall Complex provides better growth and higher value for condominium properties. Mixed use developments, it said, recorded the highest average price growth at 180 percent, compared to multi-tower projects (105 percent) and single tower developments (114 percent). Such types of projects also posted faster price appreciation, of about 10 to 12 percent, as against the 7 percent average seen for multi-tower developments.

Interestingly, SM Development Corp.’s South Residences, located in this premier integrated lifestyle community, exceeded the bar as it has since appreciated by 190 percent to P163,000 per sqm—a gain of P77,000 per sqm in capital value over a span of five years.

Competitive advantage

These data alone would show why South Residences offers a good investment opportunity. LPC pointed out that the prime location of this premier residential project—that it is part of the bigger SM Southmall Complex—already provides a premium resell price.

“The price per sqm of secondary market for all property types have higher asking price if proximate to SM,” LPC added.

More importantly, the integrated lifestyle concept pioneered by SMDC offers a unique competitive advantage for its investors, as many are willing to pay a premium just to have that unparalleled convenience and accessibility of having all essentials nearby. As the pandemic has shown, having offices, commercial centers and other essential establishments seamlessly integrated in a single community provided a crucial lifeline for residents and locators.

Add the fact that the SM Southmall Complex is accessible via the Alabang-Zapote Road, and will be easier to reach once proposed infrastructure projects such as the LRT Line 1 Extension and the Cavitex-Sucat Interchange are completed.

The SM Southmall Complex and South Residences have clearly built the perfect case study of how mixed use developments, especially one from a reputable developer, offers a safe and sound investment. Not only do such projects provide comfort, convenience and that much sought safety and peace of mind, the integrated lifestyle communities of SMDC can also offer the smart investor with lucrative returns and better capital appreciation over the long run.