Done right, condominium development is the most profitable residential project to undertake in the Philippines. With a minimum of one thousand square meters of land, a developer can build a mid-rise condominium building of five to ten stories high (note that the number of stories is subject to the city’s or municipality’s building restrictions). For argument’s sake, with just, say, a very conservative number of six units per floor, that translates to 30 to 60 units per building.

The more stories or horizontal levels a residential project has, the less its cost per square meter becomes. This is true not just for condominiums but also for townhouses and single houses. Savings, ergo profit, is realized because of the following basic reasons:

• A single roof is needed for the whole structure.

• Only one foundation is needed. The taller the structure is, though, the more complex and more robust the foundation should be and, therefore, costlier. Add to that a much stronger set of columns.

• The land is optimized, i.e., with a small plot of land, so many homes can be built. Ayala Land’s Senta Condominium in Legaspi Village in Makati will seat on a 1,865 square meter lot; will have 39 stories and 438 units with an average of 14 units per floor.

In our example, imagine slicing those 30 to 60 units into single houses. Each unit will require its own foundation and roof. Imagine erecting these single houses in a “small” subdivision; think about the roads and the setback between or among houses. Can you fit them all in a 1,000 square meter lot? Add to that a more complex drainage system and the perimeter wall. Imagine how each house will look like. – “Bulilit, bulilit, sanay sa masikip, kumilos, kumilos, ang liit liit…”

To a certain extent, townhouse developers realize profits in basically the same way. Think of a quadruplex for example; just think of the side walls. This four-unit structure has two side walls and three partition walls or a total of five. Slice them into four single houses and you end up with eight side walls and at least three setbacks between houses that will require a bigger lot.

Construction of a quadruplex is also more simple and faster. Digging the foundation for the four units involves a single process and a single set up time. Divide them into 4 individual houses and the developer will have to do this process four times, albeit, each at a smaller scale. But there’s a set up time every time he does it, making the whole process longer. That’s just for the digging of the foundation.

These are just a few things I know why condominiums and townhouses are very popular among developers. They are a way for developers to “mass-produce” housing, reduce cost, maximize profit and sell at reasonable prices at the same time.

If you know of more reasons, feel free to leave them in the comment section or contact me. If you think some of my observations are wrong, kindly do the same and I will gladly edit or totally remove this entry if necessary.

Thanks a lot

Now that you are sure of the type of home that you want, be certain that these inherent advantages do exist!

As mentioned in part 1, this two-part series is based on my article that was featured in the Inquirer.net. That article pointed out a mistake that many residential developers commit. This post hopes to convince you not to buy into that mistake.

After deciding on the what, decide on the where

After you have determined the type of home you want, the next step is to decide where your dream house should be. You have to remember this principle:

“Inherent geographic characteristics, scarcity and cost of land, population density and availability of commercial establishments, varied job opportunities and conveniences determine the suitable type of housing in a given area.”

You have to follow it because countless developers in the Philippines either refuse or fail to heed it. Otherwise, you will not get the advantages for which you choose a certain home. Or worse, you might lose a fortune on a project that will never be completed.

If informal settlers or squatters protest when they are given free housing in a relocation site where there’s not much job opportunities (what they value most), what reason is there for you to invest a fortune on a housing project that will not enhance your quality of life?

Worst mistake a residential developer commits

The worst mistake any developer can make is to construct a project in an area where it is not suitable. This is regardless of how well-designed or well-built it is.

Between 2004 and 2008, the following numbers of condominiums were started:

• almost 2,000 in Bulacan

• over 1,700 in Cavite

• 208 in Pangasinan, 174 in Davao del Sur, 135 in La Union, 130 in Iloilo

• in 2004 alone, 125 in the Cordillera Region, 57 in Mimaropa, 39 in Bicol, 36 in Soccsksargen and 23 in Caraga

Compare them with 134 residential condominiums in the entire National Capital Region for the same period.

The number of duplex, quadruplex and townhouses in some of these provinces are also disturbing but not as staggering as their figures for condominiums.

Worst mistake a home buyer commits

I’m not saying that condominiums should not be built in the provinces. I’m sure many of them were completed and delivered to their owners who are now enjoying the convenience of and the time they save by living in a condo. But their staggering number, especially in Bulacan and Cavite, makes me wonder about the following:

• How many are within short walking or commuting distance from work, schools, banks, supermarkets, wet markets, hospitals, malls or barber shops?

• How many are well-maintained? And most important of all,

• How many have been discontinued?!

Since condominiums are sold on a pre-selling basis, how many people bought into these projects and lost their money?

The worst mistake any home buyer can commit is to buy into the mistake of a developer who fails to apply the dictum “form follows function”; not only in the way a residential project is built, but more importantly, where it is built. It is by avoiding this mistake can you be certain that you get the benefits that you value most in your dream house.

In my next post, I will discuss why condominium projects appeal very much to developers, thus, their staggering number in places where they shouldn’t be.

Thanks a lot

image courtesy of nookiez