Ayala Land aims at 20% yearly growth in next 6 years

MANILA, Philippines–Philippine property giant Ayala Land Inc. is embarking on a program to further grow its business by 20 percent yearly in the next six years, with the end-goal of breaching a net profit of P40 billion by 2020.

Based on its 2020 targets, ALI president Bernard Vincent Dy said the goal would be to grow net profit by 20 percent yearly through 2020, anchored on what remains to be ALI’s upbeat prospects for the Philippine property market.

The new 2020 goal builds on the momentum of the “5-10-15” strategy—achieve P10 billion in net income and 15 percent return-on-equity (ROE) over a five-year period—set during the term of Dy’s predecessor Antonino Aquino, who retired in April this year. It is also more aggressive than many analysts’ growth expectations.

In the first nine months of this year, ALI posted a 25-percent year-on-year jump in net profit to P10.8 billion, on track with the goal of attaining a 15-percent ROE.

“We see a lot more opportunities in the Philippines,” Dy said, adding that one cannot conclude that the market was bubbling based on what could be rare transactions.

“When you talk about a bubble, it’s really a general price inflation beyond economic value of the underlying asset so I think we can’t derive conclusions based on a single transaction. We have to look on a macro basis, on several transactions,” Dy said.

At the current pace of business, Dy noted that ALI was still able to develop projects at prices that were still affordable to consumers.

“So our results have indicated that the residential demand continues to be quite good,” Dy said.

ALI’s consolidated revenues in the first nine months reached P68.3 billion, 20 percent higher than the level in the same period last year. Revenues from the residential segment alone grew by 40 percent to P40.1 billion during the period, driven by strong bookings and project completions across all segments.

Based on a report by property consulting firm Colliers Philippines, land values in the Philippines have exceeded their peak for the first time since the 1997 Asian financial crisis. This was after the Government Service Insurance System (GSIS) sold two lots in Fort Bonifacio, with land areas of 1,600 square meters each, to privately held firms Focus Palantir Inc. and Goldenwill Inc. Focus Palantier won the bidding for the first lot with a price of P500,000/sqm while the latter bagged the second lot for P458,000/sqm.

Along with ALI’s purchase of the abandoned JAKA tower in Makati central business district (CBD), Colliers estimated that average prices in Makati and Fort Bonifacio CBDs have appreciated by 18.7 percent and 38.2 percent, respectively, in the third quarter alone compared to the second quarter of this year.

Dy said in the case of ALI, the prices of its end-products were only rising at a steady pace of 5-7 percent, just tracking inflation and the underlying growth of the economy. “We’re not seeing rapid price appreciation,” Dy said, noting this was far from the 20-30 percent single-year price increases seen in other markets outside the Philippines.–Doris C. Dumlao