Despite the effects of the COVID-19 pandemic, it’s good to know that the real industry of the Philippines is surrounded by optimism. Thanks to the influx of exciting developments, the country was able to manage through economic turmoil and has gained the interest of various investors. Now that homeowners and like-minded developers are starting to offer more favorable terms, it’s a great time to think about purchasing a new property!
If you’re ready to make your next big investment, it’s important to know how properties in the country are priced. Being aware of how size and location can influence a condo’s value will be key in making the best investment possible.
Fortunately, our handy-guide on PH real estate valuation will teach you everything you need to know to get started.
Real Estate Valuation in the Philippines
Buying a property can be a very complex process. As you set terms with your seller, the final price of your preferred home or space will be influenced by a myriad of factors. Just to name a few, economic trends, surrounding developments, and personal motivations are things that can significantly affect your negotiations.
This is why real estate valuation is incredibly important. It gives you a brief overview of a property’s value and this knowledge will allow you to engage in a fair transaction. While a property’s cost will still depend on the owner’s discretion, the insight you’ve gathered can be used to improve your decision-making. To help you find the ideal investment, let’s discuss these elements in detail.
A condo’s location is arguably the most important factor in its pricing. Since its neighboring establishments can define the resident’s lifestyle, homes that are close to schools, malls, and hospitals are priced much higher. As you start searching for properties, keep in mind that spaces can always be fixed but where they’re located can never be changed.
Size of the property/land
As a rule of thumb, you should be mindful that larger properties will inherently be more expensive. Given that bigger lots provide more space, the utility it offers can greatly spike up its value. Lot prices are usually determined by measuring square meters or square feet, so get in touch with your agent accordingly.
Number and type of rooms
Aside from the property’s dimensions, the number and type of rooms it has are also taken into account. A house that has more functional spaces will generally have more value since it can accommodate more people and allow you to conduct more activities. After all, wouldn’t you think that living space with 2 bedrooms and a kitchen is much more valuable than a similar sized studio?
Fixtures and fittings
Furnished houses have more worth as compared to homes with no fixtures. Since cozy sofas, multi-functional tables, and other decorations can increase a space’s appeal, sellers can use them to leverage their property’s price. At the same time, buying a furnished home will save you the trouble of purchasing new appliances and essentials.
Accessibility to and from a property plays a key role in its pricing. Homes that are located near walkable communities, major roads, or public transport hubs are significantly more valuable compared to spaces that are stationed much farther. To shortlist your options, only consider properties that will give you easy access to work and other essential establishments.
Other than the home itself, surrounding amenities will also affect a property’s price point. Homes in excellent estates or communities have a higher value since residents can make use of clubhouses, fitness centers, and other desirable facilities.
Houses and condo units made by top real-estate corporations will boast a higher price tag. Since their development projects have a track record of great quality, sellers will utilize their credibility to raise their home’s worth.
Effectiveness of local government units
The local government unit’s (LGU) performance can also influence a property’s price. Leaders who are highly cooperative with real-estate developers are consistently able to introduce value-increasing developments. This is primarily the reason why areas such as Binan, Laguna have experienced rapid development and earned the interest of many.
Locations with high economic activity are usually home to exciting developments. This is the main reason why spaces in Makati, Ortigas, and BGC have much greater worth than similar properties in other cities.
Simple supply and demand
Just like any other asset, real estate properties aren’t immune to the effects of supply and demand. To put things simply, developments with high consumer interest and low supply will be priced much higher.
Property Valuation Methods
After taking note of the factors above, sellers will use the gathered data to establish a starting price for their properties. While costing practices may differ on a case-by-case basis, it’s useful to know the most common property valuation methods.
1. Sales Comparison Method
This practice requires sellers to take note of their property’s features and find developments with common characteristics. By looking at how much these homes were sold for, property owners can use it as a basis for their starting price. For a comparison to be valid, dealers must look at properties that have been sold under normal circumstances.
2. Cost-based Method
The cost-based approach is usually applied to developments that have been improved through the years (i.e. government buildings, hospitals, etc.). Sellers must estimate the land and building’s value, take note of construction expenses, and consider depreciation to calculate the current price of the property.
3. Income capitalization method
This technique is commonly used for spaces that are usually rented. It determines the property’s price by comparing the rate of return that an investor requires and the income that space can potentially produce. If forecasts are steady, buyers should take hold of the opportunity.
Find the Best Properties with RE/MAX Gold
With this guide in your arsenal purchasing your next big investment should be a lot more straightforward. Once you’ve found the ideal properties, the next thing on your to-do list would be to get in touch with vendors. Now that you know how properties are priced this will ensure that you don’t fall on the short end of your negotiations.
In case you’re still searching for options, don’t hesitate to get in touch with us! Our team of experts will be glad to help you find the best properties in the country!