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Ayala Land bullish on Philippine housing market

(MANILA) Ayala Land, the Philippines’ biggest developer, plans to sell more homes this year, betting that housing demand will shrug off the impact of an economic slowdown in the US, the Philippines’ largest export market.

The company will sell more than the 4,404 lots and condominiums that it sold last year, chief financial officer Jaime Ysmael said yesterday in an interview in Manila. Ayala will offer 5,622 residential properties for sale this year, up from 5,182, he said. He declined to discuss sales and profit forecasts.

‘The domestic market could neutralise the negative effects’ of a US slowdown, Mr Ysmael said. The government last month said that the Philippine economy expanded 7.3 per cent last year, the fastest pace in 31 years.

The US is the source of half the remittances from overseas nationals, which make up a tenth of the Philippine economy. Sales to Filipinos abroad and the families that they support at home make up about a third of Ayala Land’s residential sales, Mr Ysmael said. Many of those customers are Filipinos living and working in the US, he added.

Last Friday, Ayala Land said that its 2007 profit rose 13 per cent to 4.4 billion pesos (S$154 million). Its sales were little changed, at 25.7 billion pesos. The developer said that it would boost capital spending by 60 per cent, to 24.3 billion pesos. About 20-30 per cent of that will fund new projects, Mr Ysmael said.

The company will probably sell more than two billion pesos of bonds this year to pay that amount of debt maturing in the fourth quarter, he added.

Mr Ysmael also said that an Asian property fund co-founded by Ayala Land may invest in Vietnam and expand its investments in China after closing itself to investors.

ARCH Capital Management Co, the fund’s management company, raised US$330 million, compared with the US$200 million targeted when Ayala Land and two partners set up the fund in 2006.

A US or global economic slowdown ‘may close some doors but the deal flow is still quite robust’, Mr Ysmael said. ‘There might be an impact but Asia is big. There are opportunities out there despite the possible slowdown.’

Ayala Land joined with its parent company Ayala Corp and Hong Kong-based Great ARCH Co to set up ARCH Capital Management. The fund is authorised to invest in Asian countries except Japan and the Philippines. ARCH Capital’s projects in Bangkok and Macau, China, comprise a fifth of available funds, Mr Ysmael said.

Source: Bloomberg (Business Times 12 Feb 08)

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