Century Properties sets sights on affordable housing market
MANILA, Philippines – After having made its name as a developer of high-end high-rises, Antonio-led Century Properties Group Incorporated is now diving headfirst into the affordable housing market.
"The income recognition cycle of affordable housing is much faster than [high-end developments] so in the next few years we hope to produce 20,000 units every year. We're ramping up our production and we will stabilize at 20,000 affordable homes annually by 2020," said Century Properties chairman Jose EB Antonio at the firm's annual stockholders' meeting on Thursday, June 29.
"It's a big number but if you look at the big picture for housing in the Philippines for that segment, there's a big gap between demand and supply. Looking forward, we want affordable housing to be 35% of our total income," he added.
Citing government figures, Antonio said there is currently a backlog of 5 million new homes. "The whole industry ... doesn't even approach 500,000 houses in the affordable segment per year. So the industry has a lot of upside," he explained.
Antonio also noted that the "increasing purchasing power" of the middle class is key.
The sweet spot that Century Properties is aiming for is between P1.1 million and P1.8 million, with an average house and lot size of 45 square meters (sqm).
The firm already started down that path earlier this year with the launch of the first phase of its P4.5-billion Phirst Park Homes housing project, in partnership with Mitsubishi Corporation.The first phase entails approximately 2,877 homes in a 26-hectare community in Tanza, Cavite.
Beyond this, Antonio said Century Properties is building up its land bank, targeting areas outside Metro Manila such as Batangas, Laguna, and other parts of Cavite.
The houses to be built on these lands will be a mix of prefabricated and conventional houses, also to be developed in partnership with Mitsubishi Corporation, which is providing technology and technical know-how.
Century Properties also won't necessarily have to set up in-house financing in order to bring in customers.
"At the present moment there is ample credit being provided by the banking system and one of the sectors they want to increase loans to is the affordable housing market. If you think about it, it's stable because owning a house is something people really save for. The Pag-IBIG Fund will also help," Antonio said.
Part of a larger plan
Century Properties' move into the affordable housing space is part of its larger plan to transform itself into a multiplatform real estate company.
Last year, the firm turned cashflow positive for the first time since its 2012 initial public offering, while net cash provided by operations improved by P1.26 billion in 2016 from 2015.
Total revenues amounted to P7.38 billion from P10.38 billion in 2015 while real estate sales amounted to P4.97 billion from P7.75 billion as revenues have already been recognized in prior years from project completions, and there were fewer launches of new condominium projects in 2016.
Leasing revenues amounted to P337.85 million, 8% higher than the previous year, with net income coming in at P726.93 million.
Century Properties has also launched 33 buildings with gross floor area totaling 1.43 million sqm, to go along with its 16 buildings already completed with a gross floor area of 792,000 sqm as of end-2016.
For 2017, the firm plans to spend around P5 billion for condominium projects with an additional P1 billion set aside for leasing assets.
Besides the launch of its housing project in Cavite, Century Properties also partnered with Indonesian conglomerate Bakrie in May, which will see it provide land and develop 3 mixed-use themed developments. – Rappler.com