High inflation has hit the country’s mid-market housing developers the most, driving down prices and squeezing profit off the pockets of even brand names like Ayala Land Inc.
Some in the industry, Ayala Land Inc. said, sell their stock of office condominium units to help address the housing requirements of mid-market clients.
Areit Inc., the real estate investment trust of Ayala Land, recently sold office condominium units at Ayala-Life FGU Center Alabang in Muntinlupa to Next AsiaLand.
Proceeds from the sale of office condominium units will be used in the acquisition of property elsewhere, Areit said, adding quickly the business received the payment last week.
Ayala Land earlier acknowledged leaning on the high end segment of the property market, which has proven resilient in the face of rising consumer prices, for growth.
Anna Ma. Margarita B. Dy, Ayala Land CEO, said the sticky issue of high inflation is most telling on its core or mid-market segment and not so much on its top end.
“All told, launches this year should still be 70 percent premium. We’re leaning on our premium brand 70 percent this year. Now, when will it come back? I suppose nobody knows the exact time but certain things are moving in the right direction, particularly interest rates, and then it would only be a matter of time,” Dy said.
Dy’s remarks illustrates the corrosive impact of inflation on the housing segment of the consumer price index, for example, particularly on construction costs, which has retreated to P11,313.25 a square meter in the fourth quarter last year from P11,749.54 a square meter a quarter earlier, according to data from the Philippine Statistics Authority.
Residential property prices rose 6.1 percent in March this year as well, from the level posted the year prior and building permits fell to only 12,888 units in May from 13,680 units only a month earlier.
Ayala Land said that of the P33.7 billion worth of product launches in the first half this year, 92 percent were premium properties and the rest were for the core market.
Fifty-two percent of the projects were horizontal and the balance vertical.
According to Dy, Ayala Land anticipates launching P85 billion worth of products this year, or 12 percent more than last year, mostly vertical projects in Metro Manila and rest outside of Metro Manila and in the south.
Ayala Land in the 1990s catered to the higher end of the property market but subsequently widened to the middle-end and even the low-end of the market, Dy said.
But with core inflation right now stubbornly resisting to edge lower, Ayala Land would rather dwell on the high end.
