ALI’s stellar performance ‘outperformed’ expectations
Ayala Land’s sharp focus on the premium market is clearly paying off as seen in its stellar first-half financial performance that “outperformed” expectations.
Company officials reported last week that Ayala Land’s revenues rose 28 percent to a record P84.3 billion on the back of robust property demand and consumer activity, while net income grew 15 percent to P13.1 billion.
In a disclosure to the local bourse, Ayala Land said property development revenues also rose 34 percent to P51.9 billion, while residential revenues surged 40 percent to P43.7 billion in the first semester. Residential reservation sales similarly increased by 17 percent in the same period, driven by the premium and vertical segments, which include projects like AyalaLand Premier’s (ALP) Park Villas in the Makati central business district and Alveo’s Park East Place in Bonifacio Global City. To date, Park Villas is about 40 percent sold while take-up for Park East Place is nearing 60 percent.
Strength in premium segment
According to Ayala Land president and CEO Anna Ma. Margarita Bautista-Dy, they see strength in the premium segment, which is seen to continue driving growth in their residential business.
“Our gross take-up grew 23 percent for the premium (segment) and 9 percent for the core (segment) so clearly there is still a bias for premium. I think for the core (segment), we will continue to make sure that we are able to move our inventory and start launching some projects… But clearly, we see the strength more in premium than in the core as our numbers show,” said Ayala Land president and CEO Anna Ma. Margarita Bautista-Dy.
Dy pointed out the growing affluence of Filipinos as one of the key factors driving demand. She disclosed that they have a “fair amount of first-time buyers in our premium segment, which tells us that our buyer pool is expanding.”
Young buyers
This expanding buyer pool now also includes an increasingly a younger demographic—those as young as 27 years old.
While Ayala Land continues to benefit from the loyalty of long-time clients who have been purchasing from ALP and Alveo in the last two decades, it is now attracting a younger generation of buyers—many of whom are either heirs to generational wealth or are successful entrepreneurs, business owners, and top management professionals.
“A lot of our buyers are business owners. It’s a testament to the strength of the SMEs in the country, which continue to grow much faster than GDP. It’s from that segment where we find a good chunk of our buyers in the premium segment,” Dy said.
Ayala Land CFO Augusto Bengzon disclosed that a chunk of their buyers in ALP and Alveo are still mostly within the range of 43 to 58 years old, more than half of which are males and married. Their gross monthly household income starts from P300,000 for Alveo customers, and about P500,000 to P1 million for ALP clients.
“From what we’re seeing on ground, the actual sales continue to grow (and) the premium segment continues to grow. We think, going forward in the next five years, that demand will be there and we’d like to continue to be the dominant player in that segment,” Bengzon said.
“So the onus is on us to come up with products that will really cater to the requirements of that segment and will be able to compete and offer something different than (what) our competitors can offer,” Dy added.
Tempered launches
Ayala Land, however, is poised to temper its launches this year to better manage its inventory level and capital.
From its initial plan to launch P100 billion worth of residential projects, it now expects to end the year with about P85 billion worth of new launches—70 percent of which will be in the premium segment. One will be a high-value vertical project in Metro Manila, while the rest will be located south of the metro.
Dy said this figure will still reflect a healthy 12 percent increase compared to 2023.
“We really wanted to manage our inventory levels and that goes back to our move to be more efficient in terms of how we use our capital. We want to make sure that the sales and the organization is focused on moving inventory in projects already launched before launching new projects. These are the projects we already have in terms of land, permits, and plans. If the market picks up faster, whether it be in certain geographic areas or whether it be in total, we should be ready to increase that number of launches,” Dy explained.
At present, Ayala Land’s inventory level is equivalent to 19 months’ worth of reservation sales. The goal is to reduce it to about 16 to 18 months’ worth.
Creating more value
In line with this, the property giant is also looking to utilize its existing landbank of 11,300 ha, at an average of about 800 ha yearly over the next five years. Ayala Land also plans to instead activate more areas within its existing estates.
“We did a count of the estates we launched in the last 10 years and I think we launched 16 estates. What we will be focusing on will not so much be the launching of new estates, but what we would like to do is launch new districts within existing estates. We want to activate, use the landbank in our existing estates,” Dy explained.
“So it’s a slightly different approach but it’s really because we want to make sure our estates will all come to life. It helps if we focus our capital, focus our efforts in terms of making the most out of the estates that we have and in the process create more value in our existing estates,” Dy added.
