Condominium Investment in Davao City.The term passive income is widely used word in all kinds of investment including Real Estate. But how do we position real estate as an investment? Similar to other forms of investments real estate has its advantages and disadvantages. Lets take a look at its advantages first.
Real estates provide ATTRACTIVE AND STABLE INCOME RETURN which can be realize through rental income and value appreciation over the long term. Real Estate is a HIGHLY TANGIBLE ASSET. Unlike paper investments like stocks or bonds, real estate is something you can feel, see or touch. It likewise supports the strategy of PORTFOLIO DIVERSIFICATION by combining real estate with a variety of assets to reduce risk of your investments. As the old saying goes “don’t put all your eggs in one basket”. Finally real estate provides a way of INFLATION HEDGING, and as economies expands the demands for real estate drives rents higher and this in turn translates into higher capital value.
Lets now take a look at the disadvantage of real estate as an investment.
The VALUE APPRECIATION of real estate varies depending on a lot of factors. Including the area or location of the property, economic progress or lack thereof that might cause depreciation in value of the property over time. Real estate requires a lot of RESEARCH, TIME AND EFFORT for both buyers and sellers. Nowadays buyers realize that a property worth investing in, takes considerable amount of effort and time. Sellers should also do the same, to anticipate possible objections of buyers. Since real estate is a tangible assets, it requires MAINTENANCE AND UPKEEP. And finally it may take time to achieve ROI(Return Of Investments) as a lot of factors come into play that may not be controllable. Like property value appreciation rates, taxes, insurance, operational expenditures. Including other drivers, especially for those in the rental market, like influx of tourism and rental rates.
Condominium Investment in Davao City
DAVAO’S TOURISM AND HOSPITALITY CLIMATE
Compared to other areas in Mindanao. Davao City has a significant advantage due to its robust tourism and hospitality climate. In fact year on year, Davao City continues to be one of the top tourist destination in the country. And has been developed as a prime venue for meeting, incentives, conventions and exhibitions. This led to increase demands for alternative accommodations from different types of travelers, including those who travel for business and leisure. But while the annual growth of tourism remains strong, growth in the hotel sector has not been able to keep up.
From 2018 to 2019 we saw and 18% growth in Davao daily visitor count, and this is estimated to continue to grow in the next years. This growth in the number of daily visitors count, has led to a strong demand for accommodations, which the hotel sector has not been able to fill completely. Clearly there is a supply and demand gap which gives investors the opportunity to earn passive income. Because of Davao’s strong tourism sectors as well as the supply and demand gap in accommodations. The rental market in Davao City is truly a sustainable means for passive income.