Oil price slump hurting property firm’s sales

A major real estate developer is feeling the pinch of the global oil price slump, as overseas Filipino workers— especially those based in the Middle East—defer big purchases like property.

Vista Land & Lifescapes Inc., which leads in the affordable housing segment, announced higher profit and revenue in the first quarter of 2016, but noted a sharp drop in new sales.

“There has been an effect, what is happening in the Middle East, in so far as the confidence of some OFWs in terms of making big purchases,” Vista Land president and CEO Manuel Paolo Villar said in a briefing Wednesday.

The builder’s reservation sales rose by 2 percent to P14.5 billion in the first three months of 2016. That was slower than the double-digit growth in the same quarter last year.

Vista Land—which owns the Camella homes brand, popular due to its relatively low cost and diversity in locations—has traditionally relied on the OFW market for about 60 percent of its sales.

“I do think this is a short-term impact. I think the long-term prospects are very good. But obviously, the first quarter was not as good as last year,” Villar said.

Vista Land said any slowdown would be offset by the growing recurring income base from its shopping malls segment.

Vista Land said first quarter net income was up 17 percent to P2.1 billion, while total revenue rose by 6 percent to P7.9 billion.

The price of a barrel of oil at one point this year fell 70 percent below its June 2014 peak of about $108 per barrel, causing concern among OFWs living and working in regions reliant on the resource, like the Middle East.

Brent crude oil, the primary benchmark for global oil prices, was trading at more than $47 a barrel Wednesday.

David Leechiu, who heads property brokerage firm Leechiu Property Consultants, said he was “not really worried” about softer sales, adding that this was a temporary situation and Filipino workers were resilient.

“The skills of OFWs are exportable so it’s not tied down to any particular geography,” Leechiu said in an interview Wednesday. Despite worries, OFW remittances in February this year were still up by 9. 1 percent to $2.1 billion, the Bangko Sentral ng Pilipinas.