Ayala Land boosts capex as more buyers cancel

Ayala Land Inc. (ALI) is boosting investments in 2023 to take advantage of a recovering economy while maintaining a cautious stance on the residential sector, which was hit by a sharp increase in cancellations as home buyers wavered amid rising interest rates.

Ayala Land plans to increase spending this year by over 17 percent to P85 billion as company CEO Bernard Vincent Dy expects to sustain growth after profits in 2022 jumped 52 percent to P18.6 billion.

While recording robust gains for the year, the property giant’s income remained about 40 percent below core prepandemic profits in 2019.

“Despite ongoing challenges in the operating environment, we remain positive in our outlook for 2023, and look forward to introducing new offerings that will meet the evolving needs of the market,” Dy said.

Development revenues

Ayala Land’s overall property development revenues expanded by 7 percent to P81.2 billion.

Commercial lot sales soared 75 percent to P14.5 billion, however, residential sales saw “a slight dip” to P63.5 billion due to extended downpayment terms.

This came as the Bangko Sentral ng Pilipinas started aggressively raising interest rates to tamp down stubborn inflation.

Ayala Land chief finance officer Augusto Bengzon said home buyer cancellations in 2022 rose 19 percent above the prepandmiec level.

“We remain optimistic things will moderate [in 2023],” he said.

In line with this, the developer was ramping up residential expansion with the planned launch of P110 billion worth of projects in 2023—an increase of 19.5 percent. “If the market comes in stronger than anticipated we are prepared to launch up to P130 billion,” Dy said.

Weak office market

Office-for-sale revenues declined by 16 percent to P3.2 billion on slower demand for new office spaces.

Commercial leasing, whose revenues rose 62 percent to P33.4 billion, was lifted by existing office rentals and the recovery of shopping malls after pandemic restrictions were relaxed.

Shopping centers and hotel revenue doubled to P16.1 billion and P6.2 billion while office rentals grew 13 percent to P11.1 billion following the opening of One Ayala East and West Towers in Makati City.

Ayala Land plans to open new retail spaces in One Ayala and Vermosa, an estate project in Cavite.

The developer launched two new estates in 2022. These were Areza at Lipa City, Batangas, and Crossroads at Plaridel, Bulacan. Areza, a 92-hectare development, is ALI’s first master-planned, mixed-use estate in Batangas. The builder will open four new estate projects in 2023. INQ