Posted on August 09, 2015 10:32:00 PM
[ BusinessWorld Online ]
By Krista A. M. Montealegre, Senior
Reporter
AYALA Land, Inc. (ALI) said growth at
its residential property business should pick up pace despite a slowdown in the
first half and threats of higher interest rates.
AVIDA Towers in Makati City --
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The property giant has also been
beefing up its leasing business to account for half of earnings in the next
five years.
ALI Chief Financial Officer Jaime E.
Ysmael told reporters last week the 10% growth in the company’s residential
revenues in the first half -- significantly slower than the 40% expansion a
year ago -- is still “quite reasonable” given the high base as a result of its
aggressive launches since 2009.
Reservation sales -- an indicator of
future growth -- grew 8% to P52.47 billion in the first half.
“The development side, residential
will continue to grow -- that’s our assumption for the next five years,” Mr.
Ysmael said.
“We will not slow down... We will
launch to the extent the market will bear, to the extent the market will
continue to be conducive. From where we are standing right now, there is no
reason to believe the market will not grow given what is happening in the
global economy,” Mr. Ysmael said.
Rising remittances from Filipinos
abroad, robust business process outsourcing and tourism sectors, growth in per
capita income and low interest rates remain a favorable backdrop for expansion,
he said.
“Last year, if you look at our
performance, we grew our sales by more than 10% but the entire market
contracted so we gained market share,” Mr. Ysmael said.
Higher US interest rates -- with the
Federal Reserve widely expected to raise them by September -- will have a
“muted” impact on Philippine credit conditions, he said.
“If that happens, we believe the
Philippine banking system is resilient compared to the other markets. The
central bank... has not followed the other economies in increasing interest
rates because they feel the Philippine situation is a bit different and we can
afford not to raise interest too much,” Mr. Ysmael said.
“If you look at mortgage rates, there
is room for banks to even reduce mortgage rates because the net interest margin
is quite high for the banks. They are charging 8-9% for a one-year fixed [loan]
and their funding cost is less than that even if you add the intermediation
cost,” he said.
ALI is beefing up its leasing
portfolio with a plan to raise its contribution to 50% of earnings by 2020, or
the end of its five-year plan when the property firm is expected to post a net
profit of P40 billion.
Recurring income accounted for 44% of
bottom line in the first half.
“The tripling of leasable space will
deliver that,” Mr. Ysmael said, referring to a plan to triple the size of
shopping malls, office space and hotel and resorts businesses over the next
seven years from 2013 levels.
Shares in Ayala Land added 55 centavos
or 1.44% to close at P38.70 each last Friday.
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