BY AMADO MACASAET
[ Malaya.com.ph ] January 8, 2010
The marketing strategy is effectively asking potential buyers of Ayala Land apartments to prepay for the units they may intend to buy at some future time.
But while waiting they earn interest on the money they intend to use. It’s called the "Home Starter Bonds."
A buyer, not only of Ayala apartments but of its other products, may make regular monthly deposits of P5,000 with the Bank of Philippine Islands, an Ayala controlled universal bank.
At five percent annual interest, the yield on the deposits is nearly three times what regular savings deposit earns.
The cost to the Bank of the Philippine Islands is reasonably the same as what its customers pay when they buy cars.
It is a reverse process. Depositors under the starter bonds earn five percent interest on a minimum deposit of P5,000 a month. Customers of car financing, on the other hand, pay BPI about five percent a year in interest cost.
Anthony Aquino, president of Ayala Land, explained in an exclusive interview with Malaya Business Insight that "Home Starter Bonds" is Ayala’s way of helping the middle income group acquire homes at the least pain.
In five years, the depositor would have accumulated P300,000, the five percent interest not included. This amount is around 50 percent of the price of its middle class apartments that sell for P600,000 to P1 million, the discount not included.
In effect, Ayala Land is helping potential customers raise their own equity and make an interest income at the same time.
According to Aquino, Ayala Land is no longer as heavy on what it calls "premiere" apartments which are sold to the well-heeled. The concentration is now on middle and low middle markets.
Still, it has not completely abandoned building apartments—popularly known in the Philippines as condominiums—in the Ayala Center.
Aquino explained that the market for expensive units has completely changed. Back many years ago, he said, the most expensive apartments were bought for re-sale, not for permanent ownership or occupancy.
There was heavy trading of expensive units in those days, Aquino said.
There were several transfers before the unit finally ended up in the hands of a user or permanent owner.
Aquino said Ayala Land has long thought of getting out of its "cocoon" in the business district of the huge Ayala complex.
The first project outside Metro Manila is in Calamba. The community looks posh and exclusive but the prices of the units, detached individual homes in this case, are far lower than in the business district.
Aquino stressed that while people are thinking of posh though less expensive communities it is developing outside Metro Manila, Ayala Land is at the same time lending a hand in creating demand for many products and materials.
Cement, for example, has only two large markets. One is public works. The other is housing construction.
Home construction, particularly the type built by Ayala Land and other property developers exert big demand on iron and steel, aluminum and paint.
After the homes are built and are occupied, the owners buy appliances.
Eventually, Aquino said, property development outside Metro Manila will help ease traffic.
Nearly the whole gamut of business participates in home construction, Aquino said.
The company has started a similar project in Pampanga and will fan out to other provinces such as Cavite and Bulacan.
Last year, according to Aquino, Ayala Land built 5,000 economic housing units that sold for P600,000 to P1 million each.
This is a marked departure from the P10 million or so apartments called premiere products for the high-end market. The high-middle units with areas ranging from 120-130 square meters were sold for P7 million.
The middle class market was buying the 50-60 sq m apartments for P2 million to P3 million.
Ayala Land has "come down to earth" by building less expensive homes for P600 to P1 million in posh-looking communities. One big market for the less expensive but comfortable homes are retired Filipinos coming home mostly from the United States and Canada.
"They come home to roost," Aquino said. "Their children would not see them spend the rest of their lives in federally funded homes for the aged."
The retirees themselves, he said, do not want to be a burden to their working children. They come home, live in one or two-room apartments with one or two househelp.
They can afford it with their dollar-denominated monthly pensions.
The market is big, according to Aquino. But he pointed out that Ayala Land will not help fill the three million or so housing backlog for the lowest end of the market. That, he said, is a responsibility of the state, nearly able handled by Pag-Ibig, the Social Security System and the Government Service Insurance System.
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