MANILA, Philippines - Japan’s top trading house Mitsubishi Corp. is entering the booming Philippine real estate market via a joint venture with Ayala Land Inc.’s (ALI) middle-income residential arm Alveo Land Corp. for the development of a P18.5 billion mixed-use lifestyle community in the Ortigas business district.
In a disclosure to the Philippine Stock Exchange, ALI said it would own 60 percent of the project while Mitsubishi would take up the remaining 40 percent to comply with the foreign ownership limit.
The project, which will rise on more than 3.6 hectares of prime land in Ortigas Center, will be developed over eight years. No other details were given by ALI although foreign news wires reported that the project may entail the construction of more than 1,000 residential units targeting the local upper-middle income bracket.
ALI said the project is envisioned to enhance the value proposition of one of the country’s most highly urbanized zones into an integrated business and lifestyle district.
Mitsubishi’s partnership with the Ayala family dates back to 1974. The Japanese trading giant is currently the second biggest shareholder of Ayala Corp. with a 10.5 percent stake in the conglomerate.
The Japanese firm is expanding in Southeast Asia to beef up its presence in the property development amid shrinking profits from its commodity businesses. Since entering the the real estate business in the United States and then China two years ago, MItsubishi now sees Southeast Asia as its next growth market.
Mitsubishi is exploring similar opportunities in Vietnam, Indonesia and Myanmar, all of which have a significant demand for housing.
Real estate falls under Mitsubishi’s industrial finance and logistics division, which almost doubled net earnings to ¥25 billion in the fiscal year ended March 31.
Ayala Corp., on the other hand, is the holding company for the diversified interests of the Ayala clan which include retail, real estate, banking, telecommunications, water distribution, renewable energy, electronics, information technology, automotive, and business process outsourcing.