Ayala Land to venture into low-cost housing

By Doris Dumlao
Philippine Daily Inquirer
August 15, 2009

AYALA LAND INC., LONG KNOWN FOR ITS upscale property developments, is diversifying into the low-cost residential segment with the creation of a new subsidiary that will sell housing units worth between P600,000 and P1.25 million.

The company disclosed to the Philippine Stock Exchange yesterday that its board of directors has approved the formation of a new wholly-owned unit targeting the market for “starter” homes.

The new subsidiary will be separate and distinct from its upscale development arm Ayala Land Premier as well as middle-income brands Alveo Land and Avida Land. But initial launches for the new product line will be carried as a sub-brand of Avida.

The entry into the affordable housing segment completes Ayala Land’s portfolio of product offerings across different income segments.

Ayala Land intends to infuse P1 billion in seed capital to the new subsidiary on a staggered basis over the next three years, mostly to fund operating expenses and the property acquisition. The initial capitalization will cover an initial run of six projects in select industrialized rural areas in southern and central Luzon where end-user demand is expected to be strong.

“The formation of this new subsidiary supports our strategy to expand our market beyond what we currently offer and serve a broader segment of the population that demands more affordable but quality residential developments,” Ayala Land president Antonino Aquino said in a statement.

“This is a market wherein we see much opportunity and future growth,” he said.

Plans are being drawn up for the subsidiary to launch its first project in Laguna within the first quarter of 2010.

Ayala Land said it was expecting to make a significant impact on the economic housing segment with an approach that would offer “attractive designs and high quality in a functioning and evolving community at a price point that is affordable for more of the country’s young and emerging households.”

Its bread and butter is currently Ayala Land Premier, which sells residential units worth between P4 million and P20 million. This segment accounts for about 40-45 percent of residential property sales, while the rest is split between middle-income and affordable segments under the Alveo and Avida brands.