Published : Friday, January 06, 2012 00:00 [ manilatimes.net ]
Written by : KRISTA ANGELA M. MONTEALEGRE
SM Development Corp. (SMDC) expects “continued growth” in sales this year despite adopting a cautiously optimistic stance because of tougher competition in the real estate market.
Jose Gabionza, SMDC vice president, said in an interview that the Sy-led real estate developer could manage “decent sales” in 2012 after a “very good” performance last year as “the pie continues to grow” and the company “eats up some of the share of the competition.”
“You will be surprised for 2012, the level of expectations for us. It’s just getting tougher,” said Gabionza.
SM Investments Corp., the listed holding firm of the Sy family, had allotted a capital expenditure budget of P16.7 billion for SMDC this year, which will be used to finance the completion of ongoing projects and the construction of four or five projects. The developments are equivalent to about 6,000 units, which are slated for launch this year.
SMDC expects its net income to hit P4 billion in 2011. In the January to September 2011 period, its consolidated earnings grew by half to P3.1 billion anchored on the strong take-up of the firm’s residential condominium projects coupled with expected construction completion rates.
Condominium sales may reach 11,000 to 12,000 units in 2011, exceeding the over 10,000 units sold in 2010. In the first nine months of 2011, the property developer sold about 7,900 residential units worth approximately P17.6 billion.
While the property firm continues to be upbeat about the company and the real estate industry’s prospects, its outlook remain guarded because of stiffer competition from other market players.
“We are cautiously optimistic on the property market but I think there is underlying strength in property market because the backlog is huge,” Gabionza said.
Late last year, the Housing and Urban Development Coordinating Council estimated the country’s backlog at 3.7 million with developers bringing in only 20,000 to 30,000 units every month.
“With that kind of backlog, we can still be very positive about the market. Lending rates also remain very favorable to the buyers,” he said.
Even the problems overseas, particularly Europe’s debt woes, will have a minimal effect on real estate sales.
“It will probably affect [sales] if it will cut down [overseas Filipino workers or OFWs] remittances by 50 percent. If it is just about 5 percent to 10 percent, I don’t think so,” Gabionza said, citing that the country’s $1.5-billion global bond issuance was oversubscribed, suggesting “there is money in the system.”
SMDC sales were predominantly from the local market in the previous years, but the company has since improved its international thrust as part of its effort to improve sources of sales and benefit from the huge demand for condos from OFWs. The domestic market currently corners 75 percent to 80 percent of SMDC’s sales.
Its shares were unchanged at P6.90 each on Thursday.
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