Property advantage in slowdown

Property advantage in slowdown

Bloomberg
The company is looking at investing in government property that is being sold to boost state finances bled by a widening budget deficit. The government also wants to boost spending to fight the effects of the global recession, which has hurt residential sales to overseas Filipinos and reduced demand for outsourcing office space.

"We see a number of opportunities of government land being put up for sale," Jaime I. Ayala (no relation to the chairman), who stepped down as company president today, said at a briefing after the meeting in Manila. "We are actively looking at those opportunities."

The outgoing president was answering a question about whether Ayala Land would bid for the 120-hectare state-owned Food Terminal Inc. property in Manila. The government plans to sell the property this quarter and expects it to go for about 10 billion pesos. One peso is worth about 3.4 Turkish Liras.

Late payments on residential properties climbed to around 5 percent last year from about 3.5 percent in 2007, Chief Finance Officer Jaime Ysmael said at the meeting. This is "manageable" because title to the properties hasn’t been transferred to the buyers and the sales contracts are easy to cancel, he said.

Rental rates for outsourcing offices may fall 10 to 15 percent, residential sales head Bernard Vincent Dy said at the briefing.

While the officials declined to comment on first-quarter earnings, Ysmael said it would be "difficult to match" last year’s first quarter profit, which was boosted by the 762-million-peso sale of a property in Makati, Manila’s financial district.

Antonino Aquino, the former president of affiliate Manila Water Co., replaced Jaime I. Ayala as president of Ayala Land today, a move first announced last month. Ayala will become a senior managing director at Ayala Corp., the parent company of Ayala Land.