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SMDC growth slows in the first half

Posted on August 01, 2012 10:06:40 PM [ BusinessWorld Online ]

CONDOMINIUM builder SM Development Corp. (SMDC) grew its first-half net income by over a third versus year-ago levels, buoyed by a sharp increase in real estate revenues, a disclosure to the Philippine Stock Exchange showed yesterday.

The Sy-led firm realized a January-to-June consolidated net income of P2.70 billion, up 38.46% from P1.96 billion last year, while revenues from real estate rose by 73.46% to P11.9 billion, year on year.

“We are highly gratified by the warm response that the market continues to give to SMDC’s products,” said Henry T. Sy, Jr., SM Development vice-chairman and chief executive.

The performance, however, is slower than the 48.49% growth the company notched last year.

The firm’s latest financial statement was not immediately made available yesterday.

A total of 8,007 condominium units were reportedly sold in the first half, mostly from projects built in Metro Manila, SM Development said.
This is 72% higher than the 4,655 units sold in the same period in 2011.

“[SM Development’s] residential condominiums are being designed and developed to cater to the Filipino’s growing need for privacy, sophistication, and greater access to retail and home-related services which offer greater convenience and time for families to live a more balanced life,” Mr. Sy added.

For 2012, the developer is looking to spend around P30 billion in capital expenditures and launch five residential condominiums in Metro Manila that will have an estimated total market value of P37 billion, adding to its current portfolio of 15 SM Residences projects and two projects under the M Place brand.

It is also firming up its overseas expansion plans, with work on a number of high-rise structures in China seen to start as early as this year, earlier reports stated.

SM Development had said it was keen on tapping China’s growing population as well as taking advantage of properties near malls already established by its affiliate, SM Prime Holdings, Inc.

SM Development’s robust performance in the first half mirrors the positive picture analysts have painted for the condominium market.

CB Richard Ellis (CBRE) Philippines, Inc. had said a little over 50% of Filipinos bought condominium units in the first quarter, surpassing rentals, which used to be the preferred choice among Filipinos.

Conventional property drivers such as OFW (overseas Filipino workers) remittances, a low inflation rate, and low bank lending rates are also fueling the optimism in the residential segment, CBRE Philippines noted.

Further, the property consultant said that the condominium market was not experiencing a glut as thought by some quarters, given that supply levels are being adequately matched by demand.

SM Development shares rose sharply by 2.26% to P6.34 from P6.20 at its previous close.

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