Monday, August 10, 2009 | MANILA, PHILIPPINES [ Businessworld Online ]
BY KRISTINE JANE R. LIU. Reporter
THE PHILIPPINES’ largest property developer, Ayala Land, Inc. plans to veer away from building big malls toward community retail outlets to tap the "broader market."
On the sidelines of Ayala Land’s analysts’ briefing on Friday, Chief Finance Officer Jaime Ysmael said the company was looking at coming up with "small community-type retail" branches, which would be integrated with other Ayala Land property developments.
"There is limited opportunity now for large regional malls so we are looking at the smaller formats," he said.
The mall industry is currently dominated by the Sy-led SM group, with four of 36 SM malls nationwide included on the list of the world’s largest malls.
While the primary market of SM is the middle-income to low-income segments, Ayala Land has opted to tap the higher-end market.
Most of its malls — Glorietta and Greenbelt in Ayala Center in Makati, Trinoma in Quezon City, Alabang Town Center, Ayala Center Cebu, Serendra and Bonifacio High Street in Fort Bonifacio — cater to the middle and upper classes, although it has malls that cater to the masses, namely Market! Market! in Taguig and community malls Pavillion Mall in Laguna and Metro Point Mall on Taft Avenue.
Mr. Ysmael said plans for the new project have yet to be firmed up, but the new malls would be constructed within "Mega Manila."
"We are still [on the planning stage] but we are looking at a broader market than where we are right now. [We are adopting that strategy] not only in retail but also in our residential sector," he said.
Ayala Land is also exploring the possibility of selling retirement communities and condominium units priced even lower than existing projects already considered "low-end" because of the sector’s resiliency amid an economic downturn.
Unlike the high-end market where customers buy homes for investment purposes, the middle to low-end market were the least affected by the global downturn as most clients are end users who buy a house to live in.
"Ayala Land started out as a high-end developer but we broadened our coverage to tap the middle market and now we want to broaden that further to address a bigger market," Mr. Ysmael said.
Ayala Land operates under three units, namely Ayala Land Premier which is the company’s high-end arm, Alveo Land which caters to the middle-income market, and Avida Land, its "affordable" brand.
From April to June, Ayala Land’s net income dipped by 14% to P1.01 billion, while revenues fell by 2.38% to P6.98 billion.
The strong second-quarter performance brought the company’s first-half net income to P2.07 billion, down by more than a third from the same period last year.
Shares of the property developer closed at P9.50 apiece on Friday, 1.06% higher from Thursday’s close.