real estate industry

Elites scoop up prime real estate, shrug off high interest rates, inflation

Isagani de Castro Jr.

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Elites scoop up prime real estate, shrug off high interest rates, inflation

RECORD. Ayala's Alveo Land records its highest sales in the company's history in the first quarter of 2024 as it launched projects such as Caleia Vermosa in Cavite province with its Zen courtyard.

Alveo Land/Handout

Ayala Land's upscale developer Alveo reports its highest first quarter sales in the firm's history, while other major property companies also record strong earnings

MANILA, Philippines – Have you ever looked at a high-end condominium or subdivision and wondered why many of the properties appear to be unused? 

Well, there’s a basis for your hunch. Many high-end real estate were bought for the purpose of investment, which is why many appear to be idle. Many properties are also sold even before they’re finished since deals are often better in pre-selling.

With the Philippine economy continuing to recover from the COVID-19 pandemic, the country’s major property companies are seeing good earnings in the first quarter as many of the country’s elite turn to premium condominiums and lots for investments, unaffected by high interest rates and inflation. 

Ayala Land Incorporated’s (ALI) upscale brand Alveo Land, for instance, saw record first quarter reservation sales this year of P12.7 billion, its highest first quarter sales in Alveo’s history. 

“It’s a market that’s fairly robust, really resilient, one that looks for places to invest, store value,” Alveo Land President Mike Jugo said in a press briefing on Tuesday, May 7. The price range in Alveo’s high-end subdivisions and condominiums is between P13 million to P22 million.

Jugo attributed Alveo’s record reservation sales in the first three months of 2024 to two new subdivision projects south of the capital, one in Laguna province and another in Cavite province, as well as condominium projects in Metro Manila such as in Bonifacio Global City, Pasig City, and Quezon City.

In Laguna, Alveo had P1.5 billion in reservation sales from its 41-hectare Sereneo Nuvali, its sixth subdivision project launched last March in Ayala’s upscale Nuvali eco-estate. He noted though that many of their lot buyers are also end-users who are attracted to the greenery and recreational facilities such as Sereneo’s 770-square-meter swimming pool, which he said will be the largest among the villages in Nuvali.

Sereneo Nuvali is a 41-hectare project that has 415 lots with a typical size of 275 square meters and a centrally located park. The price of each property is around P15 million. 

It’s almost the same price in Alveo’s Caleia Vermosa, Alveo’s second subdivision also launched last March in lifestyle estate Vermosa, Cavite. Caleia has 540 lots with a typical size of 250 square meters and a centrally located park. Alveo’s reservation sales from this 28-hectare project reached P2 billion in the first quarter of 2024.

In Alveo’s residential condominiums, the biggest contributors to the company’s first quarter record sales were projects in Bonifacio Global City or BGC (P2 billion); Makati (P1.5 billion); Quezon City (P1.4 billion); Alabang-Las Piñas corridor (P1 billion); and Pasig-Ortigas (P800 million). 

Jugo cited three condominium projects with “strong take-up” – Park East Place in BGC; The Lattice at Parklinks Estate in Pasig City; and Nuveo condominium in the 6.6-hectare Cerca district in the Alabang-Las Piñas corridor.

High-rise condominium Park East Place near S&R and St. Luke’s Medical Center in BGC is Alveo’s “fastest-selling” condominium project, the company said. The current selling price is P450,000 per square meter or around P27 million for a 61-square-meter, one-bedroom unit.

Jugo said he’s seeing a similar picture that he saw before the pandemic when he would have almost weekly meetings with clients who are either investors or end-users. In his conversations with them, he said many of them talked about family and portfolio [investments], and it’s the same interests again this year. 

However, he believes the focus on these two is even keener this time “because of the pandemic.” 

Jugo said many of their buyers are confident that the value of their property will appreciate.

Before the pandemic, the Philippines had a “house price boom” from 2010 to 2018, with house prices in Commercial Business Districts rising by as much as 125% or by 77% when adjusted with inflation, according to Global Property Guide. 

In a disclosure on Wednesday, May 7, Alveo’s parent company, Ayala Land Incorporated (ALI), reported that its net income grew 39% to P6.3 billion in the first quarter while revenues were up 33% to P41 billion. 

“Property development revenues increased by 47% to P25 billion, driven by robust residential and commercial lot bookings. Residential revenues surged by 51% to P21.4 billion, and revenues from commercial and industrial lots jumped 59% to P2.8 billion,” ALI said. 

Similar picture

Billionaire Andrew Tan’s Megaworld Corporation similarly reported high sales in the first quarter of 2024. The Philippines’ leading township developer said its net income rose by 10% to P5 billion, while revenues grew by 16% to almost P19 billion.

“Real estate sales surged by 29% to P12.1-billion, driven by strong bookings and unit sales, while leasing revenues grew 6% to P4.6-billion during the quarter compared to the same period last year,” Megaworld said on Thursday, May 9.

Megaworld has 31 townships and lifestyle estates nationwide. In the Philippine capital, among its well-known projects are Eastwood City in Libis, Quezon City; ArcoVia City in Pasig City; Newport City in Pasay City; Uptown Bonifacio in BGC; and Lucky Chinatown in Binondo, Manila.

The Gokongweis’ Robinsons Land Corporation (RLC) reported last week or on May 3 that its first quarter consolidated EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortization] was an “all-time high of P6.15 billion, marking the highest quarterly figure in our history.” 

RLC said its property development portfolio generated P3.13-billion in revenues in the first quarter, a year-on-year growth of 25%, “driven by higher revenue recognition from RLC Residences and earnings from equity shares in Joint Venture projects.” 

RLC reported a P4-billion profit in the first quarter, while revenues went up 19% to P11 billion. It also declared a cash dividend of P0.65 per share, the highest in the company’s history. 

The Sy family’s SM Prime Holdings Incorporated, among the biggest integrated property developers in the Association of Southeast Asian Nations, reported “steady growth” in the first quarter of 2023 with net income hitting P10 billion, 11% higher than the P9.4 billion in the first quarter last year. 

It also recorded high reservation sales in its residential business in the first quarter at P26.5 billion.

In 2023, SM Prime launched the following residential projects: Jade Residences in Makati; Turf Residences in Laguna; Parkville in Bacolod, Negros Occidental; two in Tagaytay Highlands: Trealva and Highlands Residences; two in Nasugbu, Batangas: Ardea Suites and Balea Suites, both in Costa del Hamilo. 

Historically, SM Prime’s mall business accounts for bulk of the company’s earnings. This year is no different, contributing 59% of the company’s revenues with P18 billion in the first quarter. 

Revenues from residential business reached P8.5 billion, 10% higher than the P7.7 billion in 2023. Residential accounted for 28% of SM Prime’s revenues. 

Shang Properties Incorporated, which owns prime properties mostly in Mandaluyong City and Makati City, reported on Thursday P858 million in revenues from condominium sales in the first quarter of 2024, up from P675 million in the same period the year prior. –

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Isagani de Castro Jr.

Before he joined Rappler as senior desk editor, Isagani de Castro Jr. was longest-serving editor in chief of ABS-CBN News online. He had reported for the investigative magazine Newsbreak, Asahi Shimbun Manila, and Business Day. He has written chapters for books on politics, international relations, and civil society.