Sunday, 13 May 2012 19:25 InterAksyon

AYALA Land Inc. (ALI) is beefing up its land bank, especially in new geographical areas, to capitalize on strong demand for real estate.

Jaime Ysmael, ALI chief finance officer, told reporters the company is completing the acquisition of the “entire” 60-hectare “Plastic City” estate in Valenzuela City “as soon as possible.”

Negotiations on the actual structure of the agreement between ALI and the Gatchalian group are still ongoing, but it may “probably be a joint venture,” Ysmael said.

“There’s a lot of spending power in that area and the Ayala brand has been absent in that area,” he said.

Ysmael refused to comment on the talks with IRC Properties Inc., which owns a 2,170-hectare land in Binangonan, Rizal, but expressed interest in expanding in the eastern part of Metro Manila.

“There’s a very high concentration of people in that area that can afford some of our brands. We want to have presence in that side of the metropolis,” said Ysmael.

The real-estate firm may also consider expanding in Clark, taking advantage of the infrastructure projects at or near those areas.

ALI’s land banking initiative will allow the property developer to immediately serve the huge demand for residential products. The company even cut its planning cycle from 18 months to nine months to launch projects faster, Ysmael said.

In the first quarter average monthly sales take-up stood at P6.44 billion, a 49-percent improvement from the record P4.31 billion average monthly sales take-up achieved for the whole of 2011, an indication that demand continues to be strong.

“Aside from ramping up the launches, making sure we have available inventory, even the sales force is being beefed up to include international sales offices so we can tap that OFW market in a bigger way now that we have lower priced products,” said Ysmael, adding that low-income brands Avida and Amaia have been gaining market share according to a study commissioned by the company.

In Bonifacio Global City ALI will also construct the new headquarters of the Philippine Stock Exchange, which will be one of the anchors of the West Super Block right in the middle of the area’s central business district.

A high-end retail and residential tower will rise within that complex, set to become the prime address in BGC, Ysmael said.

While the property development business accounts for bulk of its revenues, ALI is moving to build up its recurring income base to provide the stability in earnings and cash flow.

This year will mark the opening of Kukun hotels in BGC and Cagayan de Oro, the launch of the 350-room Raffles Hotel and 330-room Holiday Inn, as well as the soft opening of the Pangalusian Island resort.

“There are plans to construct two more hotels this year, depending on availability of land,” said Ysmael.

ALI’s net earnings grew by 31 percent to P2.13 billion in the first quarter on the back of higher revenues from its property development and leasing businesses and margin improvements.

This puts the property developer on track to double its earnings to P10 billion in 2014 and raise return on equity to 15 percent under its five-year plan.

“Definitely, we are on track. We might even be ahead given current trajectory, all things remaining the same,” said Ysmael.

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