What’s the difference between renting an apartment and a condominium?
It is common for the terms apartment and condominium to be used interchangeably, but in the Cambodian context, these terms describe two different models of residential living.
The primary reason for the difference between apartments and condominiums tends to be in the ownership structure. A condominium will form part of a building sold on a unit by unit basis under strata-title whilst an apartment complex, or more fully a serviced apartment building, will be owned by a single owner, usually a property investment company.
Strata-title properties, being individually owned are either occupied by the purchaser or let out by investors. This can sometimes lead to competing agendas amongst the individual owners, and as a result, it is less likely that a consensus may be built amongst these individuals to organise themselves into a central body to allow a building to be let under a central leasing agent. Even when offered with guaranteed yields, these agreements may only last for a short period, usually between 3 and 6 years.
Whilst a guaranteed rental return structure may infer on the original developer or a managing body some level of control over the buildings leasing, an investor is unlikely to be inclined to spend significant sums on expensive fit-outs and intensive management during this period.
The ownership structure of condominiums means they will typically be let or owned on a unit-by-unit basis; this means that in the rental market neighbouring landlords may end up competing against each other to secure a tenant. In a building with ample supply of units, a more efficient market will arise. This should result in tenants being able to achieve a lower rent than may be possible otherwise.
Ownership of a building under a single guiding entity provides the certainty a serviced apartment operator would need to invest in the aspects of the building, which for a tenant, can set it apart from renting a condominium from an individual landlord, including facilities, interior design, additional security and more soft services.
The pricing of apartments and condominiums may also be different, with apartments more likely to be let on an inclusive rent with fewer add-ons, whilst a condominiums will sometimes allow tenants to pick and choose the services appropriate to their individual circumstance. The administrative burden and the impact of vacancy rates within a serviced apartment building will typically be greater than that of a condominium model, and as such, rents could be higher for a unit of comparable and grade.
The provision of furnishings, as well as the décor, and the quality of fittings will largely be reliant upon the grade of property selected, although serviced apartments often come more heavily provisioned, allowing the tenants to move in and out faster and with minimal fuss.
Serviced apartments, especially those under branded management or at the high end of the field, will be fully maintained by the building owner with the costs of this factored into the rent. Meanwhile, condominiums are more varied in their approach to maintenance depending upon the managing agent, the presence and policies of any owner or tenant’s committee and the service charge budget available for repairs to be undertaken. In addition, central maintenance in condominium developments will be targeted to communal and external areas, with individual’s owners picking up the bill for internal repairs. Conversely, whilst serviced apartments are maintained fully by the owner, the occupier will only very rarely be permitted to make any internal changes, no matter how minor they might be.
Another key difference between condominiums and serviced apartments is the access to services; in some circumstances condominium occupiers will be expected to pay extra to access facilities including swimming pools, gyms, saunas and car parking.
Meanwhile, a serviced apartment would come inclusive of the right to use at least some of the in-house facilities.
When considering renting an apartment it is important to fully understand the way the property is managed and operated to ensure there are as few surprises as possible further down the road. Apartments and condominiums offer distinct models of operation and it is down to the tenant to decide which model makes them feel most comfortable when committing to lease a new home.