Should You Invest in a Condominium or an Office Unit for Rental Income?

The Philippine property market has been enjoying a healthy uptrend for more than a decade already. Condominiums have become popular option for investors, getting themselves a decent rental yield and value appreciation. For instance, an apartment in The Residences at Greenbelt, (131 sqm + 2 Parking) was going for around 10.8M or 80,000/sqm (Inclusive of […]

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should you invest in a condominium or an office unit for rental income - Should You Invest in a Condominium or an Office Unit for Rental Income?

The Philippine property market has been enjoying a healthy uptrend for more than a decade already. Condominiums have become popular option for investors, getting themselves a decent rental yield and value appreciation.

For instance, an apartment in The Residences at Greenbelt, (131 sqm + 2 Parking) was going for around 10.8M or 80,000/sqm (Inclusive of VAT) back in 2004 with a 5-year 0% interest payment plan.

The same apartment now is already going for 30 million. An approximately 280% increase might not be much over 15 years; but given the current rental of 150,000/month, you’re making 17% back on top of the value appreciation. Plus, considering you would have gotten the property on a 5-year installment; you only fully paid by 2009. If you start counting by then, you would have gotten approximately a 280% value appreciation plus rentals collected that should be more or less another 150% over the past 10 years.

To keep it simple, your investment would have made approximately 420% in combined paper gain and through collected rental income. If you want to be technical about it, had you reinvested it, the rental you have collected over the years could have gotten you more than a 420% in increase – not bad for passive income!

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What’s not factored in here is the vacancy period every time a tenant moves out. These 1-2 month vacancy periods may not be much, but it could app up over a 10-year period. A solution to this is to find long-term tenants. Much as it would be difficult to do that in apartments, office units tend to have much longer contracts.

A common misconception is that offices are for the sophisticated investors as they have to be big. Much as it is better to invest in big offices, the smaller offices that are being offered in the market (around 60-75 sqm) will have a big demand in the future as today’s companies have started outsourcing and relying on people working online.

Office units provide investors longer term deals and there are already a lot of good options in the market. Here are some of the options that I recommend that are still offering long 0% interest payment schemes with bulk of the payments only due at the end of the term:

Tryne Enterprise Plaza in Arca South (Alveo Land)

Tryne Enterprise Plaza is the first office development of Alveo Land in Arca South. The Grade A Leed Certified Building is centrally located in Arca South, but its proximity to the future subway station will be very attractive to future offices. Being very accessible to employees is very important because happy employees generally mean a happier working environment. This will then lead to better productivity.

Tryne Enterprise Plaza - Should You Invest in a Condominium or an Office Unit for Rental Income?

As such, being located near the terminals would be highly beneficial to companies looking for an office space. There is also the North–South Commuter Railway that will stretch from Clark to Calamba, Laguna that is coming up right across Arca South. Connectivity will be very important in the future of real estate as business hubs are popping up everywhere across the country, unlike today where it’s mostly just focused in one area.

They are currently offering offices from 92 sqm to an entire floor of about 1,994 sqm, and are scheduled to be completed by the 4th quarter of 2023.

One Corporate Place in Maple Grove (Megaworld Corporation)

Located in the heart of Megaworld’s 140-hectare green city called Maple Grove in General Trias, Cavite, is One Corporate Place – a 17-level eco-friendly commercial office building. With the current healthy demand for office spaces in key urban locations and the ongoing road and transportation projects that will connect and make the South more accessible to the Metro, One Corporate Place at Maple Grove is an ideal investment for business owners and inspiring start-ups who want to uplift their business profiles.

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Just 20 minutes away from the Entertainment City, this office development in Cavite is easily accessible via major thoroughfares such as the Daang Hari Road via MCX, Cavitex Hi-way, and soon through the Cavite-Laguna Expressway (CALAX) and the Cavite-Tagaytay-Batangas Expressway (CTBEX). Cavite will also be the major benefactor of the ongoing construction of transportation developments, such as the LRT line extension and the Sangley Airport.

Through One Corporate Place, Megaworld has now officially ventured into selling office spaces prior to only offering office space and building leasing to commercial tenants. The units in One Corporate Place at Maple Grove range from 63 sqm to entire 270 sqm floors.

Marcus Chu is the resident WhenInManila.com property investment adviser. He has been a full time realtor since 2007, specializing in properties and office spaces around the business hubs that have proven to grow tremendously in value. His insights into the real estate industry have proven to be invaluable and has earned millions for his clients and partners. You can find Marcus’ regular columns coming soon on WhenInManila.com. For consultation and more information on your next investment, you may contact him at wheninmanila.properties@gmail.com

Offices at The Galleon (Ortigas & Co, Inc.)

The prime 7,000 sqm land that was just used as parking for years along ADB Avenue will finally be developed. Ortigas & Co, Inc. is set to pour in 11 billion for this mixed used development.

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The first phase will be a Grade A LEED certified office building called “The Offices at The Galleon”, which will have a 3-level retail area on the first 3 floors of the building. Their units range from 75 sqm to 1,551 sqm. They are targeting the turnover of the units by the 3rd Quarter of 2025.

DDT Sky Tower in Quezon City (DataLand)

This 60-story office tower is set to become the tallest building along EDSA. Located at the corner of Mother Ignacia and EDSA, it will give future offices and employees superior accessibility as it is located two minutes from the Quezon Avenue MRT station and right along the busiest thoroughfare of the country.

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This building is designed not only for the usual corporate offices, but also to support extensive IT-based operations. It aims to house the biggest BPO companies, too. Its retail spaces and food court aim to provide 24/7 support to employees in the building. Their offices range from 92 sqm to 2,600 sqm. The building will be fully operational by 2023.

Cebu Exchange Tower in Cebu (ArthaLand)

Cebu Exchange Tower is rising in an 8,000 sqm land in the packed Cebu IT Park area. It will be the largest and the tallest IT-BPM business ecosystem in the Cebu IT Park area.

Cebu Exchange - Should You Invest in a Condominium or an Office Unit for Rental Income?

It will also be the first office building aiming for dual green building certification under the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) and the Philippine Green Building Council’s Building for Ecologically Responsive Design Excellence (BERDE) certification programs in the Visayas region. They have options starting at 95 sqm.

Marcus Chu is the resident WhenInManila.com property investment adviser. He has been a full time realtor since 2007, specializing in properties and office spaces around the business hubs that have proven to grow tremendously in value. His insights into the real estate industry have proven to be invaluable and has earned millions for his clients and partners. You can find Marcus’ regular columns coming soon on WhenInManila.com. For consultation and more information on your next investment, you may contact him at wheninmanila.properties@gmail.com

The post Should You Invest in a Condominium or an Office Unit for Rental Income? appeared first on When In Manila.

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