MANILA, Philippines – Ayala Land Inc. is aggressively expanding in the affordable and low-end housing segments to capture more of one of the biggest markets for Philippine real estate: the overseas Filipino workers (OFWs).
Ayala Land president Antonino Aquino said attracting OFWs is part of a strategy to diversify their traditionally expensive and middle-income housing portfolio, and expand the company’s geographical reach into the provinces.
Currently, only 17% to 18% of Ayala Land’s residential sales is accounted for by OFWs, Aquino said, adding they aim to double that percentage in the next 5 years.
“It’s only now that we are putting up the broader segments, which [are] probably the most attractive for the overseas Filipino market,” he said.
Ayala’s expansion into affordable and low-cost housing means it will work double-time to compete with other leading property players that have been ahead in the game.
Some doubt Ayala’s move, saying it does not know the intricacies of these markets especially if it targets to build most of its projects outside of Metro Manila.
Aquino said Ayala Land will build more affordable and low-cost homes under its Amaia and BellaVita brands in the provinces because OFWs usually buy homes in the towns they came from.
“The proportion (of sales) coming from the OFW is still small… maybe it is because we’re only putting up our provincial locations now,” he said.
But he said local sales of these brands have been strong and were the main revenue drivers in 2011.
He said the company aims to double its landbank of 4,000 hectares in the next 5 years citing a number of provincial locations.
“To double landbank, we have identified Cavite, Rizal and Pamapanga. Those are the ones where we would really like to have a presence because right now we are largely in Laguna. We are also talking about the possibilities in the Visayas and Mindanao.”
Ayala is considered a late entrant in the affordable and low-end market segments.
Other companies such as Manuel Villar-owned Vista Land & Lifescapes Inc. have been focusing on these markets for several years now.
Villar was behind the popular Camella Homes, which was pioneer in low-end housing, a market largely ignored by developers in the ’80s and ’90s.
Camella encountered financial problems and was sent to the brink of bankruptcy after the 1997 Asian Financial Crisis.
Snapping several joint ventures, Villar reorganized his real estate empire under Vista Land in 2007, but still kept Camella as one of its brands.
Right now, 55% of Vista Land’s reservation sales come from OFWs in Europe, Middle East and Asia, while 5-10% come from those who are US-based.
Ayala Land is pursuing the same strategy.
“Granting that OFW remittances continue to be good and granting that the interest rate regime continues to be very positive, we will focus on that market,” said Aquino.
“If you do believe what they’re saying that the Philippines will be moving up as a country you will know that is going to be largely where the growth is going to be coming from.” – Rappler.com