Ayala Land sets P100-B capex in 2024 as property outlook remains rosy

Ayala Land, Inc. (ALI) has set PHP100 billion in capital expenditure (capex) target this year as its outlook in the property sector remains rosy, especially in the high-end market.

In a recent press briefing, ALI chief finance officer Augusto Bengzon said 34% of this year’s capex would be spent on residential projects, 24% for estate development, 19% for land acquisition, 10% for malls, 8% for offices, and 5% for hotels and resorts.

This year’s capex is 16% higher than ALI’s actual spending in 2023 at P86.2 billion, which exceeded the allotted P85-billion capex for that year.

ALI will also launch a P115 billion property development in 2024, P100 billion of which are residential projects and P15 billion are new commercial and industrial projects. Of the P100-billion residential projects this 2024, Bengzon said 80% are in premium segment and 20% are core.

“I think we’re launching more and more every year. I think it’s just that this mix of launches favoring the premium is more reflective of market opportunities,” ALI president and chief executive officer Anna Ma. Margarita Dy said.

“It’s really reflective of how different segments of the market that have been affected by the pandemic and the increase in interest rates,” Dy added. She added that the middle-income segment, which is heavily reliant on mortgage in acquiring housing units, is also more vulnerable to inflation and higher interest rates.

“It’s usually the middle market that I guess is more vulnerable to these changes and the premium segment is a little bit more resilient. That changes the behavior. And we’re just making sure that we are addressing the market that we feel is the most robust,” Dy said.

ALI remains ready to change the mix once the company sees that the middle-income segment has bounced back, Dy said. “So we’re hoping, in our internal plans, maybe in three years time, we will be seeing our core come back. And if it’s sooner than that, we will be ready,” she added.

Most of these residential projects are horizontal development at 52% and the 48 are vertical residential projects.

In terms of locations, 44% of ALI’s residential launches will be in Metro Manila, 38% in South Luzon, 7% in Central Luzon, and 11% in the Visayas and Mindanao.