Be secure with developer before settling in

By Tessa Salazar Inquirer MANILA, Philippines--Property experts note that aside from “good sign” the deluge of condo developments brings for the Philippine property market, it gives prospective buyers more choices in terms of size, design, location and price. Global Property Guide’s chief economist Prince Christian R. Cruz notes that the more options available, the better it is for buyers. Richard Raymundo, Colliers International’s director for research and consultancy, says that as with other industries, a more robust property sector would contribute more to the economy and also increase property values. He also says another positive result of a property sector boom is increased employment for the construction outfits. But are low-priced condominium developments enough for you to “bite the bait,” so to speak? Without driving you back to overpriced condo units from reputable developers, experts remind Filipino condo unit buyers not to commit the common mistake of buyers in the past. If you’re considering buying from condo developers without proven track records, don’t just take their word for it. Investigate. “Residential units are sold on a preselling basis in the Philippines. Buying from a developer with a good track record gives an assurance that it will be delivered on time and with the quality agreed on,” Raymundo advises. Buying a condominium in the Philippines “is very tricky,” Cruz notes, and he reminds buyers to seek first the developer’s track record in terms of reliability, service and quality. “The company’s reputation in terms of structural design is very important. It is easy to check the size and layout of condo units, but to check whether substandard materials were used or that the building can withstand typhoons and earthquakes is difficult.” Cruz stresses that the Philippines is located along the Pacific Ring of Fire, where earthquakes and volcanic eruptions constantly threaten the land. “Completely surrounded by water, we are also under constant threat of typhoons and flood.” Cruz says the building’s life actually depends on its structural design and maintenance. “In other countries, a well-maintained building can last up to 100 years without any major renovations or repair. In the Philippines, a building’s life span is probably shorter due to harsher environmental conditions.” He adds that condominiums are set like a corporation. What the unit owner actually owns are shares to the corporation proportional to the unit’s size. Contrary to popular belief, the owner does not lose ownership of the unit after 50 years, according to the Condominium Act (RA 4726). The owner of a condo unit as a shareholder in a company has a say on what would be done to the condominium building. Raymundo says a condominium is run under a condominium corporation. “That is why there are condominium unit owners’ meetings held to decide on issues like property management, special capital expenditure, condominium rules and regulations. This said, the financial position and how the association dues are arrived at have to be transparent to all condominium owners.” Cruz says that as the condominium building gets older, association dues used for maintenance typically gets higher. “If unit owners feel that association dues are too high, they have the right to see the company’s audited financial statement. They should remember that they are not mere tenants in the building, they are stockholders. The property manager should serve at the owners’ pleasure and not the other way around. Active participation in the condominium board could prevent this from happening in the first place. Cruz says condo buyers should ask questions, not just from the real estate agent and the developer, but more importantly, from prospective neighbors. These include other condo owners and people within the locality. “They know if it floods in the area, if there are serious peace and order problems, or if the garbage is regularly collected. These are simple things that are often neglected but are very essential.” What rights do condo unit owners have after the building has lived out its supposed life span? How would an owner know if association dues are used properly? Questions like these have to be answered even early on. Raymundo says that each building owner has a proportionate right to the land on which the building stands. Once the building is economically obsolete, the land, however, retains value. “The property can be redeveloped with each unit owner having a proportionate right or share in the land value. For example, if there is a 10,000-sq-m condominium and Owner A owns 5,000 sq m, Owner A has a right to 50 percent of the land and its value,” Raymundo says. Some condominium developers experience difficulties forecasting market demand, Cruz says. According to him, not all developers conduct a proper market study before building a condo building. Since there are always chronological gaps between planning, construction and marketing, several factors such as customer preferences, economic conditions and construction costs, may change. “There can be a mismatch between what is available and what is demanded, especially in terms of unit sizes. While this can be remedied by merging or dividing units, this is costly and can affect the building’s structural integrity,” Cruz reminds. For more tips on how to choose structurally safe condos, check Inquirer Property’s July 14, 2007 issue or log on to http://showbizandstyle.inquirer.net/lifestyle/lifestyle/view_article.php?article_id=76523