To say that the Philippine condo housing market is booming is an understatement. In Metro Manila, for instance, newly constructed condo towers are a common sight, not to mention newly minted townships and mixed-use projects touted to rival Makati’s, The Fort’s, and Ortigas Center’s foothold as the capital’s premier CBDs.
Condominium living then is fast becoming both a trend and a lifestyle choice that the demand for it has risen. Developers are definitely bullish. In fact, according to Colliers International Philippines, approximately 32,700 condo units will be turned over in the Makati CBD, Ortigas Center, Rockwell Center, Bonifacio Global City, and Eastwood City alone between 2014 and 2017. This does not even include projects in upcoming townships, such as Arca South in Taguig, Vertis North in Quezon City, and Circuit Makati.
Furthermore, developers are casting a wider net to capture a market previously untapped. A lot of them are venturing overseas. Several major players are setting up sales and marketing offices in foreign cities where there’s a sizable overseas Filipino community, while others are partnering with foreign brokerages to boost their sales.
After the reservation the buyer is required to pay the remaining down payment within a pre-specified time period. Some developers offer a deferred payment scheme; that is, part or all of down payment will be paid on an installment basis.
Yet even though condos are the “in” thing and that they make relatively safe, long-term investments, looking for one to call your own or invest in is no different from shopping for a house. Extensive research is required and numerous factors need to be considered. Much more if you’re an overseas Filipino or a foreigner looking into buying a condo in the Philippines.
Here are some useful information that can help you better understand how the buying process works.
Preselling Versus RFO Units
Most first-time buyers find the terms “preselling” and “ready-for-occupancy” confusing. In fact, the term “preselling” itself may bewilder the average American or Australian (as “off-plan” is more common in their territories).
If you find yourself in the same situation, ask yourself:
What is my purpose for buying one?
Preselling or off-plan properties are those sold before completion, while RFO units are already made for purchase and immediate use. Generally in the Philippines condos (and in some cases house-and-lot projects) are sold at the preselling stage. RFO properties are unsold inventories or resale properties.
If you are a property investor, preselling condos would make better investments as they usually come with lower introductory price or discounts and flexible payment schemes, not to mention their value can significantly increase over the course of their development. The downside to buying one, however, is waiting for the turnover date, which in the Philippines usually takes 5 years for a high-rise condo.
If you are reluctant to commit your hard-earned money to something that is merely a perspective, RFO units would be the better option as they are ready for turnover. You can move in right away and experience the amenities that come with your new home. The drawback is that the unit prices are much higher compared to preselling units. If you’re not paying in cash, you’re required to ready a down payment of equivalent to at least 20 percent of the purchase price and bank financing approved.
For Filipinos Buying from Abroad
So, you have found the property of your dreams—what now? First, you will need a representative—also known as an “attorney-in-fact”—to process your requirements and settle your transaction. In almost all cases, the representative is an immediate family member, but it can be anyone you really trust. After all, this person can and will sign documents on your behalf.
Once you have your representative, you may then get your special power of attorney (SPA) from the property developer. This legal document authorizes your representative to be your attorney-in-fact who will act on your behalf. You will need to have it “consularized” in the Philippine embassy or consulate and then sent to your representative.
Aside from the consularized SPA, you also need to prepare the following documents:
- Photocopies of your passport and valid IDs
- BIR tax identification number
- Certificate of employment and compensation
- Employment contract
- Postdated checks
A reservation fee is usually required, which will eventually form part of the down payment. This is accompanied by a signed Letter of Intent (LOI), which is your offer to the owner (or developer) to purchase the property. After the reservation the buyer is required to pay the remaining down payment within a pre-specified time period. Some developers offer a deferred payment scheme; that is, part or all of down payment will be paid on an installment basis, usually up to two or three years.
Upon completion of the down payment, you need to apply for a mortgage loan and once again you need your representative/attorney-in-fact to do it for you. As a rule of thumb it’s better to get pre-approved for a mortgage loan at 3–6 months before you commence bank financing.
For Foreign Buyers and Investors
Unlike locals, who can purchase land in the Philippines, foreigners are only allowed to buy condominium units. In addition, foreign ownership in a single condo project must not exceed 40 percent, per Republic Act 4726 or the Condominium Act.
To protect their interests, foreign buyers and investors are advised to transact only with reputable property developers and their duly authorized sales representative, or use a licensed real estate broker if buying from an individual seller. Condo projects duly licensed to sell units can be checked in the HLURB website, while the licensed numbers of real estate brokers can be checked in the websites of the Professional Regulation Commission.
If buying from the United States, buyers can connect with the National Association of Realtors to get referred to Philippine-based International Realtor Members.