Condo prices reflect gap between rich and poor
If we’re wondering how big the gap between the rich and poor has grown in our country, we only need to look at the prices of real estate that are being sold in Metro Manila nowadays.
Never mind parcels of land, because their prices have grown by humongous leaps and phenomenal bounds. This may have something to do with the fact that many of the lot buyers are construction developers who have their eyes set on building condominium projects or townhouse structures, so they have the appetite and deep pockets to buy at much higher prices. Lot owners also know of their properties’ potentials for such developments, so they have expectations of high prices.
Let’s examine the prices of residential condominium units instead. Condominiums should logically have more reasonable prices because they multiply the size of the land that enable the landowner/developer to maximize profits. A 1,000-square meter lot area, for example, can become 30,000 sqm of saleable space with the construction of a condominium building with more than 30 floors.
It’s naturally very expensive to construct a condominium building but still, the profits also exponentially increase in proportion to the height of the building. For buyers, condominium units should be relatively cheaper—compared to house and lot packages—because they merely pay for a fraction of the land price instead of the entire lot, and essentially shoulder the price of the housing unit.
According to a real estate executive, the current construction cost of low-end residential buildings is at P50,000 per sqm, while high-end ones start at P100,000 per sqm. The executive said that prices of construction materials have increased considerably these days, which is a big factor for the jump in building cost. Add to that, the price of the land, and permit expenses.
A survey of current prices in Metro Manila shows that new condominium units are sold at prices between P150,000 per sqm and P250,000 per sqm for buildings outside of the premiere business districts of Metro Manila. These are units that are anywhere, whose sizes are between 17 sqm and 50 sqm. These units, because they’re the most affordable of condominium spaces, should ideally cater to the lower-middle class who need work accessibility in the Metropolis.
At P2.5 million for a 17 sqm unit, and P7.5 million for a 50 sqm unit, however, they are unaffordable to the ordinary masses considering prevailing salaries that have not increased but have even considerably depreciated because of high inflation. This shows the need for the government to fast-track train projects because the working masses need affordable housing in the nearby provinces of Laguna, Cavite, Rizal, Bulacan, and Pampanga.
For high-end units located in the premiere areas of Makati City, Bonifacio Global City in Taguig City, and Ortigas Center in Pasig City, the prices range from P300,000 per sqm to as high as P600,000 per sqm. In this high-end category of condominium projects, one encounters eye-popping prices: P50 million for 120 sqm units and P100 million for 190 sqm units. The news is that these high-end units sell briskly. This is happening at a time when businesses are still recovering from the pandemic, when cost of living is high, and when external and environmental factors are volatile.
One wonders, where is the money coming from? Are these high-end buyers local, foreign, or Filipinos who have migrated overseas? What drives them to invest fortunes in these expensive units? The prevailing rental rates for these pricey units give a return-on-investment of below 5 percent annually, which is normally unattractive for most businesspersons.
Besides, condo units have not been traditionally considered as wise investment because buildings depreciate and new buyers and renters prefer newer buildings.
If we wonder why so many facets of our society have become unfathomable, and even unrecognizable, it is because we’ve been creating galaxies out of our communities that have light years of differences in their needs, wants, hopes, and dreams.
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