New township projects to sustain Megaworld’s growth

Megaworld Corp., the listed property arm of tycoon Andrew Tan, is eyeing continued growth across its core real estate sales and rental segments, driven by a trend of strong demand that is likely to continue in the next few years.

The builder is now focused on implementing several of its township projects across the country after amassing a 4,000-hectare land bank, which should help sustain earnings growth, Megaworld executive director Kingson Sian said during the builder’s annual stockholders’ meeting Friday.

During the meeting, Megaworld disclosed certain targets such as hitting between P90 billion to P95 billion in reservation sales—a revenue indicator—in 2015 against about P85 billion in 2014. Real estate sales from 2014 to 2016 would hit P88 billion, Sian said.

Moreover, rental earnings in 2015 would come in higher at P9 billion versus an initial target of P8 billion and grow further to P10 billion in 2016, Sian said. That compares with a rental income of P7.1 billion in 2014.

“The pressure to acquire more land is not there because we have a lot in our invento   ry,” Sian told reporters. “We can now focus on execution instead of acquiring more land.”

He was referring to launching more township projects, which are integrated communities involving residential, leisure, office, retail space as well lifestyle components that the company pioneered.

It had 15 township projects in 2014 and this year, it should add five more, based on a presentation to shareholders yesterday.

Megaworld, which is part of Tan’s Alliance Global Group Inc., will support its expansion plans for this year with a capital spending budget of P65 billion, part of a P285.8-billion budget the developer said it would spend through 2019.

“We started the township trend in the Philippines. So the direction is to continue to expand our township footprint to maintain this pioneering leadership,” said Francis Canuto, Megaworld chief finance officer.

So far, two townships have been launched: Northill Gateway and The Upper East, both in Negros Occidental. The other three townships, which will cover about 300 hectares and will be located in Luzon and Mindanao, are yet to be rolled out.

On the leasing segment, Megaworld would have added around 300,000 square meters of gross floor area in its overall rental portfolio by the end of 2015. It is also opening two new hotels this year: Richmonde Hotel Iloilo, a 149-room business hotel in Iloilo Business Park, and the 480-room Belmont Luxury Hotel in Newport City.