Augusto Cesar Bengzon—Ayalalandlogistics.com
Industry giant Ayala Land Inc. is delaying P10 billion in property acquisition deals until 2023, cutting its annual capital spending program amid uncertain market conditions.
From an estimated P90 billion, the builder is now targeting to spend about P80 billion in 2022, according to Augusto Cesar Bengzon, chief finance officer of Ayala Land.
“There are certain conditions, precedents that have to be fulfilled by the land owners and, of course, we’re negotiating harder,” Bengzon told reporters during a media briefing on Friday.
“We don’t need to rush it and we think, probably next year, we will be able to come to terms,” he added.
Ayala Land originally planned to spend P13.5 billion on land acquisitions, representing 15 percent of the full year budget. It deployed about P4.5 billion to buy property in the first half of 2022 out of the P30.2 billion that was spent.
Ayala Land might find trouble negotiating for bargain deals as real estate values stay resilient despite the market downturn caused by the COVID-19 pandemic.
Leechiu Property Consultants, for example, said high-end land prices have held up, making these a “viable store of value” during the health crisis.
For Ayala Land CEO Bernard Dy, the silver lining was that the increase in real estate prices, especially over the past decade and a half, was less driven by speculation.
“We are not seeing a collapse in property values. Whenever property values go down significantly that’s when you’re going to see a lot of cancellations,” Dy told reporters.
Ayala Land saw residential sales from January to June drop 9 percent to P27.4 billion but overall revenues were up 9 percent to P53.3 billion on higher mall, hotel and commercial lot sales. Profits during the period jumped 34 percent to P8.1 billion.
The developer, part of the Zobel-led conglomerate Ayala Corp., has been stretching payment terms to boost sales.
Data from Leechiu showed developers were reducing down payments for pre-sales and doubling the amortization period in some cases.
Dy said more lenient payment terms would persist through the second half of 2022. He also expected commercial and leisure segments to continue driving growth during the latter part of the year. INQ