MANILA, Philippines — The global financial turmoil has curbed demand for high-end residential property in the Philippines but prospects remain bright for shopping mall as well as middle-income and affordable housing, top officials of property giant Ayala Land Inc. (ALI) said Wednesday.

For the first quarter, ALI expects its net income to edge lower from the year-earlier level because of some nonrecurring gains booked last year, but most core businesses are still seen ahead of the company’s expectations, company president Jaime Ayala said at a news briefing after the ALI annual meeting of stockholders.

“So far we are actually pleasantly surprised that we’re tracking ahead of our expectations and holding relatively firm versus last year so far and, at the same time, as we look forward to the second and third quarters, we do see some slowdown,” said Ayala (no relation to the Zobel de Ayala family that controls the company).

He said residential property was the segment hit hardest by the major global downturn, partly because a significant part of demand comes from overseas Filipinos, primarily those in North America.

In 2008, about 22 percent of ALI sales revenue came from the overseas Filipino market segment.

Given the uncertainties in the global financial markets, demand among overseas Filipinos softened as early as the second and third quarters of last year, Ayala said.

ALI chief financial officer Jaime Ysmael said, “It will be a more challenging year for residentials, for high-end especially and that will probably continue. But what’s good is the middle-income and affordable [lower-income markets] are holding up and because of that we’re shifting our focus to those two sectors of the residential market.”

Ysmael said ALI first-quarter net income would not match the year-ago level because of last year’s big nonrecurring gain booked from the sale of a prime lot on Valero Street in the Makati business district.

“So that will not be there this quarter, so expect this quarter to be effectively lower,” he said. “It’s a significant transaction. We booked something like P600-P700 million in net capital gain in March 2008. It will be difficult to match that.”

Ayala said ALI remained positive on business prospects this year because of its array of products catering to different income segments and geographical location.

“If people shifted their money into subdivision, for instance, that’s a good hedge against the asset deflation that we’re seeing elsewhere,” he said.

He added that the retail side of the business had exceeded expectations, while the office segment continued to post some growth although lower than the previous years.

“The market is still holding although it has come off a bit from the go-go years of 2007 and 2008,” Ayala said.

While growth in the office segment has slowed down, there are still pockets of growth, he said.

“We’re still seeing on a regular basis that companies overseas are looking for new offshoring locations such as the Philippines,” he said. “We’re also seeing that some of our locators are increasing their space with us.” Edited by INQUIRER.net