Comparative price analysis of the different housing types for the middle class market

If you are to be asked: What is the least expensive type of housing today, a single detached house, a townhouse or a condominium unit? What will your answer be?

Condominium towers, many in the process of construction, are scattered all over Metro Manila. Majority of these condominium projects are targeted towards what one developer calls the premium middle class market. These are priced between 2 million and 6 to 7 million for a three-bedroom unit. The high demand for this type of condominium is indicative, in part, of their “affordability.” But their affordability doesn’t mean they are the least expensive

Affordability means that something is within reach of one’s financial means but it doesn’t mean it is reasonably priced.

When looking for a house, don’t dwell on the total price, focus, instead on the price per square meter or floor area of the house.

Condominium

A one-bedroom condominium unit in Grass Residences behind SM North Edsa with a floor area of 24.67 square meters sells for P2,467,000 or P100,000 per square meter. A 2-bedroom unit that measures 45.46 square meter sells for P4,656,000 or P102, 419 per sqm.  This condominium development has 2,000 units per tower and a car slot costs around P500,000.

The reason why condominium units are priced so high is because a buyer pays not just for his unit. Part of his payment goes to the construction of amenities, open spaces and the common areas.

The big down side to buying a condo is you own the land on which the building stands in common with the other 1999 unit owners.

I was once told by a developer that a condominium is the most profitable housing to build. With a very small land to build on, he said, if a developer builds a 300-unit condominium tower on it, he breaks even if he sells the first 100 units. The remaining 200 units are profit. This may be an exaggeration, but given the propensity of developers in building condos, perhaps he is correct to a certain degree.

Townhouses

On the other hand, middle class townhouse units cost half and you get to own the lot on which your unit stands.

In my most recent post about Villa Zentossa, all the units are single-attached or duplex wherein two units are partitioned by a firewall in the middle. A basic unit with one-car garage, 3 bedrooms and 2 bathrooms and a floor area of 85.24 is priced at P4,546,720. Thus unit price is P53,340 per sqm.

In another townhouse community (that I will write about soon) in Quezon city, a basic single attached unit has 2 bathrooms, 1 powder room, a family room and 3 bedrooms. It has a floor area of 139 sqm and sells for P7,500,000 or a unit price of P53,956 per sqm or almost the same price as Villa Zentossa’s.

Single Detached House and Lot

Although this one is in Antipolo City and not as accessible as the previous examples, it’s still worth knowing how it measures up.

It has a 3-car garage, 3 bedrooms, two bathrooms, plenty of closet spaces in all bedrooms and a nifty kitchen. It has a floor area of 140 sqm and priced at P5,400,000. Unit price, therefore, is P38,571 per sqm.

The middle housing market in the Philippines can be likened to the supermarket industry. The ordinary Pinoy buys “tingi” or piecemeal in small packs not because they are reasonably priced but because they are affordable; they are within easy reach of his financial means. He gets what he wants, albeit at a small quantity and at a higher unit price but he doesn’t spend all his money by buying in bulk where the real savings are.

Thank you so much

jun sanchez
Licensed Real Estate Broker
PRC Registration Number 4562
0915.965.1389
0923.594.4460

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Comments

  1. Hello C.J.,

    The fact that it is only 2 miles or 3.2 kilometers away from SM Southmall doesn’t necessarily make it ideal for commercial development. If the property is located along the Alabang-Zapote Road and is absolutely flood-free, then it’s feasible for a commercial development.

    If it is located inside one of the many subdivisions in Las Pinas, and also flood-free, perhaps you’re better off putting up a townhouse development on it. All this should be taken as mere opinion and not as advice since I don’t know much about the property.

    Developing a property even if this small is something that is best left to experts. That’s why I recommend that you put up a joint-venture with a company that has lots of experience on this matter.

    I do not do property development work no do I do consultation work. I’m just a broker.

    If you can provide me via email details of the property – location plan and some pictures – and I like what I see, I might, and I repeat, I might be able to connect you with some qualified people.

    Here’s my email address: junsanchez@yahoo.com

    Thanks

  2. c.j.montanez says:

    Hi Mr. Sanchez,
    Thanks for the information I got from your article. I am a small property owner (1,400 sqm) at Las Pinas City and with the growth I saw (I have been out of the country for 13 years) around our place (about 2 miles from SM Southmall), my interest to develop instead of selling it was aroused. Do you think developing it will be a great idea? How much do you think is needed to start developing an area this small, to put up clinics/offices on the ground floor and dorms/rooms at the second floor and above? Do you also accept Property Developing Work? Or do you do consultation work?. Thank you so much.

  3. Hello JM,

    I’m sure they study first the demographics of their target market before they come up with the distribution of condo room types. For experienced developers like SMDC, they use “historical sales” as a factor to determine the distribution.

    Thanks for dropping by.

  4. Hello Mr. Jun!
    Thanks for posting this.
    I’ve a friend who once told me that condo developers usually get 200%profit from their projects. I doubted it, but im now giving it a thought when you mentioned they break even, say, after selling 100 out of 300 units..
    Anyway, do you have an idea on how developers determine the distribution of condo unit types (how many studio/2-bedrm/3bedrm for a single project)? What particular statistics do they use?

    Best regards,
    JM

  5. Hello Nesty,

    I’m sorry I cannot provide you with any information about the Grove. The best I can do is to provide you a link to Rockwell’s Contact form.

    As to your second question, what people do is to simply divide the total contract price of a condo unit with it’s floor area to get the price per square meter.

    The car slot is not included in the computation as it is sold separately from the unit.

    Thanks a lot for dropping by.

  6. Hi Mr. Jun,

    Have been keeping an eye on The Grove by Rockwell for sometime, and I very keen to understand what is the price per sqm of owing a unit there.

    1) Would you have any info and analysis?
    2) Also, for condominium projects, how do we exactly arrive at the price per sqm? Need to include the parking space too in computing the price per sqm?

    Thanks in advance for your reply.

    More power to you!

    Regards,
    Nesty

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