Ayala Land to launch Myanmar, Vietnam projects next year
MANILA, Philippines - Property giant Ayala Land Inc. (ALI) plans to launch next year its initial projects in Myanmar and Vietnam as it exits China following a slowdown in the real estate sector of the world’s second largest economy.
Initial joint venture projects in emerging and frontier markets will allow ALI to learn more about the overseas property market, said ALI chief finance officer Jaime E. Ysmael.
“It will be mixed-use because that is our formula. Residential is the easiest to do but it will have a small retail component to make it much more livable,” Ysmael said.
“What’s important is the relationship building especially in these markets where there are big companies with access to land,” he said.
Early this year, ALI announced is pursuing a $30-million residential development in Myanmar through a partnership with a local property firm.
Ysmael said ALI is also considering a project in Thailand where the property market is not yet in the advanced stage.
Under the international expansion program, ALI will focus on Southeast Asian countries following its venture in China.
“We’re on exit mode in China for now,” Ysmael said.
“Unfortunately, China has slowed down in the residential segment. We’re no longer expanding so we’re just trying to sell what we have,” Ysmael said.
In August 2010, ALI marked its first expansion abroad by partnering with Sino-Singapore Tianjin Eco-City Investment and Development Co. Ltd. to develop a 9.78-hectare property. The project will offer more than 1,100 units in 19-tower residential buildings.
It is located in the modern and sustainable 3,000-hectare Tianjin Eco-City project southeast of Chinese capital Beijing.
So far, 50 percent of the residential units were already sold, Ysmael said. ALI, whose partners are Keppel Land of Singapore and the Tianjin City government, has invested around $17 million in the residential project.
“What made it more difficult is the government’s effort to slow down the property market,” Ysmael said.
China’s State Council has implemented numerous measures to arrest rapid price increases in the property market, including higher borrowing rates and capital gains tax on second-hand property transactions.
Other major developers like Keppel Land of Singapore, Shimao of China, Farglory of Taiwan, Mitsui Fudosan of Japan and Sunway of Malaysia also suffered from the market slowdown.
“It’s a learning experience on the access to the supply chain, how they build and how they market,” Ysmael said.
Despite the slowdown in the property market of the world’s second largest economy, Ysmael said the Philippines is still on an upswing.
“There’s plenty to do here,” he said.
ALI will spend P70 billion this year, up from P66.26 billion in 2013, to complete ongoing developments and new launches to help sustain the growth trajectory in the coming years. It also plans to launch 78 projects consisting of 30,000 residential units with an estimated value of P142 billion.
Net income of ALI jumped 25 percent to P3.46 billion in the first quarter from P2.76 billion a year ago on the back of a 23 percent growth in revenues to P22.75 billion.