Have Condo or House Pasalo ring a bell to your ears?
It has been a recent phenomenon for investors in the past year since we went to a standstill a year ago, those initial investor who wish to immediately divest their real estate properties particularly residential condominiums, townhouses and homes in National Capital Region (Metro Manila) and elsewhere in the Philippines. In this topic, we will focus more on residential condominium which played a significant number of cases for assume balance. A condo unit's assumption of balance (known as Condo Pasalo) from banks or other financial institutions where unit owners are currently struggling to keep up their payments of this supposed income producing investments as they became white elephants when the pandemic hit the country. The real estate sector almost near rock bottom where the residential condominium segments were the hardest hit at - 15% drop with residential leasing for condo significantly drop because of many factors but there were definite increase in sales on residential properties outside of NCR and the townhouses in the city.
Philippine Property Bubble?
In the leasing sector for residential properties, it seems there was an artificial increase on the leasing or rental particular in the housing and office sector at high density locations such as Makati City, Bonifacio Global City in Taguig City, Mall of Asia in Pasay City and Paranaque City because of the previous influx of mainland Chinese who are working with POGOs companies then followed by the growth and expansion of some of Information Technology - Business Process Outsourcing (IT-BPOs) companies run by multi-national corporations operating in the country and employing our very own Filipino workers with skills and talents in the service accounts particularly in the North America, Europe, Australia and other countries.
Selling at a lost?
As the prices of resale condominiums continuing the go down, the tendency of the unit owners is to sell it at a loss in order to recover the down payment or equity used in the acquisition of the property or a little profit for the seller / owner to pay the necessary expenses, taxes and others. This is in fact, would be further fulfilled with the assumption of balance by signing between the two parties with the current mortgagor.
Rents go Down?
In recent reports, rent on residential condominiums have recently normalized on pre-pandemic periods but in the fourth quarter report from Colliers Philippines mentioned that the average price of rent per square meter is around P 710.00 per sq.m. One of this factor reflect that it went down from -4.5% from previous 2019 at 6.9 %. There is a possible increase between 2021 to 2023 of 1.5%, averaging around P 741.00 which based on their prediction. In reality, some figures might be lower than the recent report because of this current pandemic affected Filipinos of all walks of life and unlikely that unit owners could have reduced their rents for humanitarian reasons of their lessee.
Possible High Foreclosure rates
Recently, the banking sector has been stringent in letting possible home owners to lend from them with the economy on a very slow movement that went into a negative drop of 15 % in the recent 2020 press release stated previously. With these developments, banks are sometimes unwelcoming in order to lessen their exposure on debts and other factors with the rising unemployment and possible economic downturn. But still, banks remain optimistic and aggressive in looking for clients who have high net worth and can afford to get a home loan for acquisition or improvement.
Opportunities abound to Risk Takers
Investing in residential condominium is not for those with faint-heart on investing in possible high yielding investment. An investor must be studious, cautious and do his due diligence in venturing in such endeavor as it requires a lot of money, sweat and tears to fulfill one's dream of owning a real estate not just for one's own use but for possible passive income generator in one's cash flow. For first timers, dabbling into real estate is just one of the opportunity that a person can do in developing one's potential for financial freedom in the future.
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