Is It Really Worth It? How to Properly Assess A Condo’s Value

Prime location is often the reason cited to justify the hefty price tag of a condo unit. After all, both investors and tenants are willing to pay for the right neighborhood that's close to work and recreational areas without the hassle of commuting and dealing with the notorious Metro Manila rush hour traffic. But how do you measure how prime a location is? And even if built on a highly rated location, how does building quality affect its price?

Most existing classification systems used by government agencies segment residential units based on prices. For KMC-Savills, however, there is more to the story. Although it is true that generally prices should reflect all available market information, other factors also affecting the market positioning should also be considered in the classification as well. We believe that the various market segments behave individually due to their different characteristics, drivers, and dynamics, even though they share a lot of similarities as a whole.

Before investing on a property, here are the three major categories to consider:

Locational Features

There are three sub-categories under the locational features: macrolocation, microlocation, and development potential of the sub-market.

a. Macrolocation
The general location of the property is considered its macrolocation. This reflects the common perception of what a prime location should be.

For KMC, areas with the highest macrolocation ratings are the central business districts Makati City and Bonifacio Global City. These CBDs are seen to be more desirable than others and face a stronger demand, due to certain factors such as commercial activity, district maturity, current real estate stock, availability of various modes of transportation, and presence of major thoroughfares.

b. Microlocation
Microlocations are defined by boundaries within the submarkets; higher rated areas are central parts of each sub-market that are considered excellent locations. Sample microlocations in Makati are Ayala Center, Glorietta; Apartment Ridge; and Legaspi Village.

Residential condominium projects in such areas are observed to be more desirable given their proximity to retail stores and other commercial establishments.

c. Development potential of the sub-market 
Development potential of the sub-market refers to the expansion and other development-related activities that stimulate the growth within districts. Such activities increase land values over time and makes the sub-market more desirable in the future.

Areas with great development potential are expected to create greater demand in the coming years. Currently, the highest rated areas in this category are Bay Area, Quezon City Business District, McKinley West.

Building Specifications

For building specifications, KMC also takes these categories into consideration, namely: lifecycle of the property, overall quality of the condominium, facilities and amenities, aesthetics, and floor density.

a. Lifecycle of the property
Lifecycle of the property measures the value of the building over time, looking at factors such as physical deterioration, poor maintenance, changes in user preferences, and property management.

b. Overall quality of the condominium
On the other hand, the quality of the condominium is typically correlated to the developer's consistency in track record and quality of the portfolio.

c. Facilities and amenities
Amenities increase the desirability of a property; this is why properties with top-of-the-line and unique amenities are typically classified as high-end or luxurious developments.

d. Aesthetics
The building's visual appeal and architectural structure, design and functionality is measured in the aesthetics aspect and a more up-to-date and functional building design increases the property's value.

e. Floor density
A lower floor density suggests the level of exclusivity of the project, which also pushes its price point.  

Market Positioning

Pricing of units falls under the market positioning category and is a major factor in assessing a condo's value.

Luxury and high-end developments with higher ratings usually fall into the PHP 140,000 and PHP 170,000 and beyond per sq m bracket. Luxury residences in this price range include Raffles Residences in Makati and Essensa in Bonifacio Global City.

In need of property valuation services? Contact KMC MAG Group today!