Megaworld eyes P90B in residential property sales in 2017

Tycoon Andrew Tan-led property developer Megaworld Corp. aims to sell P90-billion worth of residential inventory this year, citing resilient demand from homebuyers and higher purchasing power of households supported by overseas remittances.

The reservation sales targeted by the property firm this year is three times the P30-billion worth of new residential inventory that it plans to bring to the market this year.

“The residential property market continues to show good promise. It’s very strong right now, I think owing to the fact that the value of the dollar is increasing vis-a-vis the peso,” Megaworld senior vice president Jericho Go told reporters after the company’s stockholders meeting yesterday.

“Remittances have increased [in terms of peso equivalent of foreign exchange inflows] and if I we were an overseas Filipino expat and my dollar is now [worth] P50 versus P40, maybe now is the best time to buy,” Go said, noting that real estate transactions typically accounted for 50 percent of total remittances.

Last year, Megaworld’s residential reservation sales hit P87 billion, exceeding the target of P80 billion. Its sales take-up target for 2017 is about 3.45 percent higher than the actual reservation sales last year.

Megaworld derives 50-60 percent of its business from residential development while the rest comes from the leasing of office and retail space.

To date, Go said the firm was “on track” to hitting its full-year reservation sales target of P90 billion, an indicator of potential revenue growth in the years ahead.

Sales were expected to come from projects in BGC, Iloilo and the new township project in Pampanga. Some 30 percent of residential sales would likely be generated outside Metro Manila but in the next five years, this share would increase to 40 percent as Megaworld rolls out more projects outside the metropolis, Go said.

In terms of new residential product launches, Go said the target would be to launch P30 billion this year.

Over the last three years, Go said Megaworld had pared down its inventory from P180 billion to P90 billion. This means the sum of the remaining units in projects that were being offered under pre-selling and ready-for-occupancy (RFO) units in projects already completed but yet to be sold.

Go said only 10-15 percent of Megaworld’s inventory consisted of RFO units.

Megaworld also announced yesterday that it was strengthening its presence in various provinces in Luzon with the expansion of its development portfolio in Pampanga, Cavite, Rizal, Batangas and Laguna. The company is allocating around P10 billion for the various Luzon developments this year.

“There is so much opportunity here in Luzon and we believe that after aggressively expanding in the Visayas and Mindanao, it is time to give focus on our Luzon developments,” Go said.