Pinoy millennials turn into homebuyers
MILLENNIALS have emerged as a strong market for affordable homes with the influx of residential units that now cost just as much as buying a car or consuming two cups of gourmet coffee per day.
8990 Holdings Inc. – which has vowed to conquer Metro Manila’s mid-cost residential condominium market – reported that young adults aged 20 to 35 accounted for 55 percent of the company’s total sales last year, rising from a share of 50 percent in 2014.
“We have consciously made our prices affordable: from P450,000 to P1.4 million pesos. It’s like a brand new home for the price of a good second-hand car, or a monthly amortization equivalent to two cups of coffee everyday at Starbucks,” 8990 Holdings president Januario Jesus Atencio reported during the company’s recent stockholders meeting.
This suggests that for as low as P5,000-P6,000 per month, even young people can now avail of a housing loan to purchase their own unit instead of spending the same amount to rent living space close to work.
8990 Holdings builds affordable homes for the average, working class, lower-middle income Filipino family. Its market includes government workers, private employees, business process outsourcing (BPO) workers and overseas Filipinos.
“Our buyers are deeply aspirational – they want to move up from being renters into property owners. But they are practical – they want value for money. And they are optimistic,” Atencio added.
For its part, 8990 Holdings’ business model has emphasized on construction that is fast, housing finance that is cheap, and a collection platform that is good, Atencio said.
In 2004, 8990 Holdings decided to use pre-cast wall panels when the industry was still building houses made of hollow blocks. “Through trial and error, many mistakes and discoveries later, we were able to scale up our technology that produced so far 43,306 solid pre-cast houses in 39 completed projects since we started 12 years ago. By the end of 2015, we had a capacity of 14,880 units. In 2016, this will ramp up by an additional 56 forms with a new capacity of 28,320,” Atencio said.
The simplest way to cure the housing backlog in the country, Atencio said, would just be to build more houses – and use pre-cast wall panel technology to build it fast.
“And you will also see our explosion in Metro Manila where we shall invade the mid-cost condominium space with some 50,000 new low priced condo homes with our very own DECA Malls as the major amenities,” he said.
For instance, 8990 Holdings is developing residential condominium towers in Cubao, Quezon City and Mandaluyong that offer “halfway” houses to urban workers. The residential units measuring 13 square meters will come fully furnished with beds, cabinets, complete toilet and bath, table and chairs, air condition units and microwave. They are priced starting at P1.2 to P1.5 million per unit.
In the first half of this year, 8990 Holdings’s net profit grew by three percent year-on-year to P2.18 billion. Gross sales rose by 6 percent year-on-year to P4.73 billion. The net margin of 46 percent for the period exceeded the guidance of 40 percent.
During the first semester, 8990 Holdings delivered 4,289 units worth P4.73 billion, exceeding the target of 3,899 units (worth P3.58 billion) by 32 percent. Reservation sales inched up by one percent to P4.37 billion in the first half.
8990 Holdings booked a 9-percent growth in six-month revenues from housing operations as housing revenues increased by nine percent and contract to sell (CTS) income – referring to earnings from its in-house financing program – jumped by 21 percent.
Bulk or about 89 percent of the gross income came from new sales while 11 percent were realized from cancelled accounts.
Likewise, Atencio reported that the company’s cash flow from operations turned positive in the second quarter for the first time since the company went public. 8990 Holdings booked a positive cash flow of P41.64 million in the second quarter, reversing a deficit of P525.99 million in the first quarter. This was attributed to increased levels of Pagibig (HDMF) loan takeouts and amortization collections from its P20.6 billion CTS portfolio.
