Ayala Land cuts spending after selling fewer high-end condos last year

MANILA, Philippines - Ayala Land Inc. will reduce spending for projects this year after earnings fell last quarter and the company sold fewer high-end condominium units last year. The company will be looking to develop more projects in the middle-income segment in light of declining consumer spending and lower remittances from overseas Filipinos. It has allotted P17.1 billion as capital expenditures for the year, lower than the calendared P24 billion in 2008, Jaime Ysmael, Ayala Land chief finance officer, told reporters on Tuesday. Despite record capital expenditure allocation last year, the developer has tempered its spending to P18.9 billion owing to deferment, cancellation and scaling down of projects. "This is a very challenging time to launch new projects," said Ysmael. “Bookings of high-end condominium units in 2008 declined from 508 to 171, with sale from One Serendra East Tower not enough to make up for the sell-out of the highly successful The Residences at Greenbelt project, which accounted for bulk of the units in 2007," the company said in a disclosure to the Philippine Stock Exchange. In 2008, the company sold 4803 condominium units, 15 percent lower than the 5,644 units sold the previous year “with sales value also dropping by 12 percent to P18.4 billion," the company said. The company will focus on the development of projects that are already being constructed, Ysmael said. Should sales pick up, Ysmael said Ayala Land may launch projects in the middle-income market. Alfonso Reyes, Ayala Land spokesman, said the company considers high-end residential market and high-rise condominiums as particularly risky. The company has adjusted its plans to give it more flexibility to launch new projects in the affordable subdivision sector. As for the business process outsourcing segment, Reyes said Ayala Land has limited the number of projects to be completed in its BPO campus-type development in the areas of University of the Philippines Diliman and Nuvali in Laguna. Other sites that may be available for development are those in Baguio, Makati and Manila. Despite the expected smaller purse of consumers, Ysmael said the company's revenue outlook remains stable given the number of its current available projects. Ayala Land is also preparing its fund-raising options with a P1-billion credit line ready for draw down should financing be needed, on top of the company's P2.4-billion long-term fixed-rate notes issuance last month. - GMANews.TV