Vol. XXII, No. 86 [ BusinessWorld Online ]
Monday, November 23, 2008 | MANILA, PHILIPPINES
AYALA LAND, Inc. will not cut its spending for next year despite the threat of slowing demand as a result of the global economic downturn that started in the US.
Jaime I. Ayala, president and chief executive officer of Ayala Land, said the company was looking at either matching its budget for projects this year or increasing it further.
The property arm of the country’s oldest conglomerate will finance the projects with its own cash and through bank loans.
"The company currently has over P20 billion in capital expenditure, the highest ever that the company has allotted for its projects," Mr. Ayala said.
Ayala Land allotted as much as P24.3 billion on projects and capital expenditure this year, an increase of more than half from its P16.2-billion budget last year.
But the company does not expect to spend the whole amount due to slowing demand for real estate. As of September, Ayala Land had spent P12.2 billion.
Mr. Ayala noted that while the company had yet to decide how it will distribute the capital spending to its units, Ayala Land remained active in the construction of its projects.
"There will be no downsizing in our capital expenditure next year and all projects will be finished on time," he added.
He said the group would remain aggressive next year, even as he admitted that it was adjusting the strategy for its business process outsourcing (BPO) arm.
Ayala Land, he added, might focus more on subdivisions, saying "people want to put their money in lands in times of crisis because of its low price."
In the third quarter, the realty firm’s net income dropped by a tenth to P1.02 billion due to rising construction material costs. Its nine-month net profits went up by almost a quarter to P3.84 billion.
Ayala Land earlier said it would launch 5,622 residential units this year, 8% more than a year earlier.
It also said it would expand its shopping centers. The company is also expanding its BPO business in the next three years
Property analysts have noted that while real estate companies might experience sluggish demand for high-end property units, the market for affordable and mid-priced housing continues to grow.
On Friday, Ayala Land shares went down by 5.17% or 30 centavos to close at P5.50 apiece. — Kristine Jane R. Liu
