Vol. XXII, No. 84 [ BusinessWorld Online ]
Thursday, November 20, 2008 | MANILA, PHILIPPINES
BY DON GIL K. CARREON
LISTED STA. LUCIA Land, Inc. is going slow on all its major projects as it anticipates sluggish demand for housing units due to credit tightening.
In its third-quarter report to the corporate regulator, the realty firm said it expects lending to the real estate sector to tighten as a result of an ongoing financial crisis in the US and Europe.
But the Robles-led company remained confident that migrant workers, its main clientele, would be spared by the credit crisis.
It noted that buyers of its products usually borrow only up to P2 million, which is not to difficult to obtain.
Sta. Lucia Land also does not expect its customers to go past their amortization dues, which will shield it from negative credit exposure, since property purchases are generally for personal use.
"This will greatly help minimize the effects of laying off workers, which will result in an increase in nonperforming assets," the firm said.
Sta. Lucia Land said it would continue to focus on joint venture projects, which has a minimal impact on the company’s cash flow.
The firm said its planned joint venture projects consist of 10.81 million square meters of land to be developed and sold in three to four years.
Sta. Lucia Land said it would finance most projects with its own cash since it hopes to minimize borrowing, which is more costly now.
In a telephone interview, Ramon Jose E. Aguirre, research manager of property think tank Colliers International, said Sta. Lucia Land’s watchfulness is consistent with the strategy taken by its rivals.
Last week, Villar-led Vista Land & Lifescapes, Inc. said it would defer some of its projects to next year as the effects of the global economic downturn on consumer spending remained uncertain.
"It does not mean they cannot do the projects. It’s just that the market is really volatile right now," Mr. Aguirre said.
"There is a decision paralysis now. Everybody is playing safe. That’s what usually happens when there is volatility. You just sit around, wait and observe," he added.
The property analyst said joint ventures are a good move for property firms since these help them avoid having to spend all cash.
Mr. Aguirre said he saw nothing wrong in Sta. Lucia’s decision to finance most projects using its own cash, as long as it had allotted funds for these.
Local interest rates, however, are still lower compared to other countries in the region, he added.
BusinessWorld could not reach company officials for comment.
Sta. Lucia Land said its satellite offices in the Middle East were growing, boosted by demand for subdivisions from Filipinos working there.
Sta. Lucia Land’s net loss in the third quarter ballooned more than a hundred times to P74.6 million from a year earlier, due mostly to operational costs and taxes incurred from Sta. Lucia Realty Development, Inc.’s P10.72-billion property infusion into the firm in exchange for 10 billion shares.
The company’s losses from January to September also ballooned more than 200 times to P251.13 million.
The company said it expects to improve its cash flow and revenues with the sale of more real estate.
