Three years after breaking into mainland China’s residential property market, Ayala Land Inc. reported it was halfway through its first project—a 19-tower residential complex project in Tianjin Eco-City.
The project is moving slower than targeted given the slowdown in the Chinese economy but residential sales are proceeding well, without the need to cut prices, said ALI chief finance officer Jaime Ysmael.
The residential complex is being built by ALI in partnership with Keppel Land and the government of Tianjin Eco-City. The Ayala property arm has a 40-percent interest in the project, Ysmael told reporters at the sidelines of an ING-Financial Executives Institute of the Philippines (Finex) CFO forum.
Ysmael said the Chinese property market was undergoing difficult times and even bigger property players from Japan, Taiwan and Malaysia were also facing rough sailing.
“As you know, the China market has been problematic but we’re fortunate that we priced it at mid-range, so we didn’t have to cut down prices,” Ysmael said.
To date, he said 50 percent of the towers committed by joint venture Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. (SSTEC) had been built.
Under the agreement, the venture must develop more than 1,100 residential units it the complex located at the gateway of the Eco-City’s “Start-Up” area. The first phase of the project, covering 11 towers, started construction at the end of 2010 and was originally expected to be completed within 20 months.
Asked about sales take-up in China, Ysmael said sales volume had yet to reach 50 percent.
In China, developers are allowed to sell residential units only after a certain stage of completion.
Ysmael said ALI had so far spent $16 million to $17 million for the China project. “These are not very high-rise projects,” he said.
Asked whether ALI would pursue more projects in the mainland, Ysmael said: “The initial idea was for us to graduate and be given a potential site in commercial center, but this may take awhile,” he said.
Tianjin Eco-City, which is 40 kilometers from the Tianjin city center and 150 kilometers from Beijing, is a 3,000-hectare collaboration between the Chinese and Singaporean governments. It was designed to showcase the future direction of urban planning and sustainable development.
In the meantime, ALI expects to post “good” financial results in the second quarter of the year in line with the momentum seen in the first three months.
In the first quarter, ALI grew its net profit by 30 percent year-on-year to P2.76 billion as all business lines contributed higher earnings. Sales take-up value for the first three months reached P19.2 billion, equivalent to an average monthly sales take-up of P6.4 billion, comparable to the record P6.5 billion average monthly sales take-up achieved for the whole of 2012.