Ayala mulls putting up shopping centers abroad

Conglomerate Ayala Corp. is considering the possibility of putting up shopping centers abroad in its bid to take advantage of the opportunities offered "by what is happening in the rest of Asia," a top company executive told The STAR.

Newly-elected Ayala Corp. president and COO Fernando Zobel de Ayala said their active presence in the real estate sector abroad is currently limited to Thailand and the United States. He said they have so far invested $100 million in the overseas property market, $30 million of which is in the US.

In Thailand, Ayala was a co-developer in a residential apartment building. However, Zobel de Ayala said they are also looking at retail opportunities there, as well as in other countries in the region.

Through its Singapore-based unit Ayala International, Zobel de Ayala said the conglomerate will also continue its diversification into residential and commercial properties in the US.

"We have began to look at playing the role of developer in the US, where our presence is right now limited to investing funds," he explained.

Ayala International has acquired choice properties in Australia, Hong Kong, and Singapore, and has made other investments in Singapore, Hong Kong, Japan, and the US.

Zobel de Ayala noted that exciting things are happening in the real estate sector in Asia. "Aside from the opportunities in other emerging markets, we are also looking at the markets in China and India for our future growth," he said.

Ayala International has built a steady pipeline of development projects and is exploring opportunities in high growth regions through direct property investment and fund management. "But we are now trying to build our development capabilities abroad. And that includes going into retail sector shopping centers ourselves," he pointed out.

Zobel de Ayala, who is also chairman of Ayala International and top Philippine property developer Ayala Land Inc. (ALI), said they are staying away from high-profile large cities in the US and looking at other areas where there are opportunities.

With ALI, which is 61-percent owned by Ayala Corp., he said they see no situation where the parent company will become a minority shareholder. "This means though that there is still a lot of elbow room to sell small amounts of share for liquidity purposes."

Zobel de Ayala added he also expects the growth in the local property sector to continue.

"There are very interesting elements that are working well for the sector. Right now, the interest rates are low and the banks are offering longer terms at fixed rates. These are key ingredients in the market. But there is one new factor - the overseas Filipino workers, considering their growing affluence abroad. Everyone knows that the Filipino is attached to his homeland, and that is why we see OFWs investing their money in real estate," he said.

Among the various sector, he said the more affordable range of housing projects are moving faster and with greater volumes. "The cheaper it gets, the less speculative it becomes," he noted.

ALI president Jaime Ayala earlier pointed out that OFW remittances have boosted the property company’s business. While in 2004, 16 percent of ALI’s housing unit sales were to OFWs and Filipinos living abroad, the figure jumped to around 25 percent last year.

"The millions of dollars being sent back to the country by our OFWs and kababayans living abroad is helping drive spending in our economy, particularly in middle-income and mass housing sectors," he said.

He said ALI subsidiaries Community Innovations and Avida which cater to these markets have recorded phenomenal levels of growth in the past couple of years and this growth is being fueled by OFW remittances.

In 2005, a concerted effort was made to establish channels to cater to this market. Ayala Land International Sales Inc. was formed, targeting Filipinos living abroad and OFWs, while Avida has established a sales office in Milan, Italy. "We recognize the growing importance of this market and we are bullish on the growth prospects resulting from this. We expect this market to be a significant platform for growth in 2006 and beyond," Ayala added.

In 2005, ALI generated a net income of P3.6 billion, up 21 percent from the previous year due to the healthy growth of most of its business lines. "As interest rates remained subdued and strong overseas remittances continue to drive housing demand, take-up of residential projects remained brisk," the company official said.

Ayala said that looking ahead, they expect to grow their shopping center gross leasable area significantly in the coming years. The company currently has three retail developments under construction including the 195,000 square meter Tri Noma in Quezon City, which will open in 2007, and the 31,000-sqm. Greenbelt 5 which will add a total of 233,000 sqm of gross area by 2008, a 32 percent increase.