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All 18 Jul 2023

Why luxury condominiums make excellent investments

It’s a given that real estate ranks high on the list of great investment options for savvy investors, due to its low-risk nature, high return and capital appreciation potential, and its status as a viable hedge against inflation.

But many are wondering not only about real estate but about luxury condominiums in particular. Would they themselves be worthy investments?

In a nutshell, yes, definitely—and here are not just one or two but as many as five reasons why this is so.


Reason #1: the demand for luxury developments

The luxury market is nothing if not resilient. According to the latest Colliers Philippines report, last year, following on the heels of pandemic-wrought economic instability, the luxury condominium market accounted for as much as 34% of total growth, propelled by key projects in major locations. This is a key indicator that the demand for luxury condominiums and developments is strong, and may even be pent-up given the eagerness of many for comfortable and exclusive lives. 

Tellingly, the bulk of the condominiums in Metro Manila nowadays are targeted at the middle-income market—making it a certainty that luxury buyers will be clamoring for more upscale projects and further underscoring how much of a good investment luxury condominiums are. For instance, luxury developments such as Haraya Residences by Shang Robinsons Properties Inc. seem to be attracting the interest of many.


Reason #2: careful “revenge spending” on luxury real estate

Speaking of pent-up demand, the COVID-19 lockdowns and restrictions in general had the effect of forcing the affluent to reduce their level of spending, on luxury real estate as in many other things. But now that things have improved considerably, many of these well-heeled buyers are picking up from where they left off. That being said, they are not just looking to spend blindly; the recent economic convulsions will have taught many of them to be judicious regarding what they spend on.

This makes luxury developments and condominiums no-brainer items for the rich to invest in, since, due to their high-performing nature, they can offer better returns than other developments.


Reason #3: the children move out…

The subsidence of the pandemic has also thrown open the doors of the family homes of the affluent. Many of the younger generation are now on the verge of getting married and moving out to start new lives and families elsewhere. And where better for them to go but to luxury condominiums?

These young people will likely be gifted with or will purchase a luxury condominium of their own. They prize their independence and that of their own families from their parents, but will also be swayed by the practicality of living in master-planned developments that offer amenities that even their own households may not be able to offer, and which are extra safe and secure due to 24-hour security.


Reason #4: … and the parents make their own plans

But even those affluent parents who remain in their family houses may be looking to invest in luxury condominiums themselves. They may well be thinking about downsizing and living more simply now that their children are gone and have families of their own. Their family homes may be too spacious and hard or expensive to maintain now that their children have left the nest.

These people may well be tempted by the efficiency and simplicity of living in a luxury condominium now that they no longer need their houses’ space. Luxury condominiums can offer the same exclusive lifestyle that these people have become accustomed to, minus the unneeded space and featuring increased efficiency and practicality.

As a matter of fact, these homeowners can even consider renting out their homes while they stay in their condominiums—making these houses passive sources of income.


Reason #5: innovating for the future

The final reason as to why luxury condominiums make great investments has to do with competitiveness and being market-savvy.

Hand in hand with the booming luxury residential market comes an increased focus on innovation and quality. Luxury developers can be expected not to rest on their laurels, such as they are, even in a market that is proving more than receptive to their current offerings. 

Buyers and the market itself can anticipate developers to up the ante across the board, whether it be in terms of design, the quantity and quality of amenities, the level of comfort and so on and so forth. 

This makes the affluent luxury condominium sector a must-watch as far as upcoming and future developments, and their investment potential, are concerned.