Oct. 9 (Bloomberg) -- Ayala Land Inc., the Philippines’ largest builder, plans to buy properties in the capital and nearby provinces to expand its land portfolio and meet its goal of increasing profit to 10 billion pesos ($241 million) by 2014.
The company that created Manila’s main business district in Makati City will develop similar precincts on 74 hectares of prime land it bought from the government last month for 24.3 billion pesos and on a 29-hectare property, both in the capital, President Antonino Aquino said. Capital spending this year may increase from an already-upgraded plan of 47 billion pesos, a record, if any land purchase is sealed, he said.
“The trajectory of the country is moving up. Ayala Land should then move ahead of the pack in securing the land bank in anticipation of further growth,” Aquino said in an interview at his office in Makati City. “Obviously, land banking is an exercise you have to do early enough.”
The Philippine economy grew 5.9 percent in the second quarter, more than economists estimated, as higher public spending and consumption spurred the strongest six-month performance since the 2010 rebound from the global crisis. The Asian Development Bank has raised its forecast for Philippine economic growth this year to 5.5 percent from 4.8 percent.
Ayala Land shares climbed 0.9 percent to 23.60 pesos at 9:45 a.m. in Manila. The have gained 56 percent this year, outpacing the Philippine benchmark stock index’s 24 percent advance.
Central bank Governor Amando Tetangco on Oct. 5 said inflation in the Southeast Asian nation will remain within its target this year and next, giving monetary authorities space to keep interest rates low. It held the overnight borrowing rate at a record-low 3.75 percent last month and will hold its next policy meeting on Oct. 25.
Profit in the first half rose 28 percent from a year earlier to 4.33 billion pesos, the company said Aug. 3. Net income this year may rise to 8.61 billion pesos from 7.14 billion pesos, according to a Bloomberg survey of 12 analysts.
Ayala Land is “definitely well on track” with its 10 billion-peso profit target by 2014 and earnings in the third quarter followed the same “positive results” as in the first half, Aquino said. Benign inflation and low interest rates are supporting home purchases, keeping Ayala Land in step with its plan of building 25,000 housing units this year, he said.
The developer and tycoon Henry Sy’s SM Group are competing for an alliance with the Ortigas family’s OCLP Holdings Inc. to develop the family’s property holdings in one of Manila’s business districts.
Metropolitan Manila is composed of 16 cities. The largest city in the metro area is Quezon City. Makati is its main business district.
On June 29, Ayala Land said it’s in talks with a group led by Ignacio Ortigas for an alliance and has set aside an initial budget of 15 billion pesos for that venture. The company has “allotted a budget on the basis of the developmental plans that we’re prepared to put up,” Aquino said yesterday, declining to elaborate.
Philippine Estates Corp., the builder owned by businessman William Gatchalian, on Sept. 25 said it is in the final stages of negotiations with an Ayala Land unit for a joint venture on an industrial park in Valenzuela City. Aquino declined to comment during the interview.
“We have the branding of building successful business districts, and that is something that is unique to us,” Aquino said. “What we’re eyeing are large, contiguous areas.”
Buying land to boost its holdings will probably take up a third of its spending in the next three years, Aquino said.
To contact the reporter on this story: Cecilia Yap in Manila at firstname.lastname@example.org