Eyes on prize: Ayala Land banking on inflation-immune wealthy

MANILA, Philippines  —Last December, top executives at Ayala Land’s luxury real estate division held a series of discreet meetings with some of their wealthiest clients.

Their job was to convince these super rich individuals to plunk down a record $9 million (P504 million) for the opportunity to own a 600-square meter home in Park Villas, a residential tower rising in the heart of the Makati City financial district. It was not a tough sell.

Over a few intimate sessions, 20 percent of the 45-unit project was sold, generating billions of pesos in sales for Ayala Land, one of the country’s biggest developers.

“It’s one unit per floor with three bedrooms. It’s basically a house,” Joseph “Mike” Jugo, head of the upscale Ayala Land Premier and Alveo brands, told the Inquirer.

“This was private selling so we were doing it one person per day in an undisclosed area where we can talk about the project and help them appreciate it,” he added.

Park Villas stands out as a luxurious exception in the portfolio of the Zobel family-led builder. But it underscores the company’s new strategy targeting wealthier Filipinos and foreigners as it sets an ambitious goal to double profits to nearly P50 billion by 2028.

Premium segment

“The market that we feel is more robust is the premium segment, which is why we are ready and really improving our quality, our specifications to make sure that we continue to lead in that particular segment,” Ayala Land president and CEO Anna Ma. Margarita B. Dy said during a company briefing on Tuesday.

READ: Ayala Land premier tops off Arbor Lanes

Since last year, Ayala Land has been sharpening its focus on building homes and projects for the upscale market, where demand is robust as these buyers are less sensitive to the sharp increases in interest rates and inflation.

Residential developments remained the company’s major earnings driver, accounting for 34 percent of its P100-billion investment budget in 2024.

The value of new homes this year will amount to P100 billion, with 80 percent in favor of the “premium” segment.

Ayala Land said 20 percent of its new homes would go to its “core” or more affordable brands such as Avida and Amaia. The mix was similar in 2023, with 88 percent going to premium versus 12 percent core. But company officials were quick to point out they were not ceding their presence in more affordable segments. Despite its smaller share of the pie, they aimed to double new launches for core projects this year.

READ: Ayala Land grows 2023 profit by 32% to P24.5B, targets P50B by 2028

“If the core were to come back tomorrow, we would address that segment,” Dy said.

Double new launches

“A lot of what happens to us is very dependent on what happens to the economy. So, we’re hoping, and in our internal plans, maybe in three year’s time, we will be seeing the core come back. If it’s sooner, then we will be ready,” she added.

Some analysts remain skeptical of the developer’s plans given its development pipeline focused within Metro Manila, where the work-from-home (WFH) trend has caused office vacancies to shoot up.

“We think refocusing on the upper segments is one part of the picture, but diversifying developments away from Metro Manila is another,” said Estella Dhel Villamiel, First Metro Securities head of institutional research.

“As mentioned during the briefing, 44 percent of target launches are still in Metro Manila, where we think demand could lag, especially in the face of greater adoption of WFH and exodus of [Philippine Offshore Gaming Operators],” she said.

“With these in mind, [Ayala Land doubling its] income in five years remains to be seen,” she added.