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By Likha C. Cuevas-Miel, Reporter
DESPITE the surging inflation and creeping
interest rates, the real estate unit of Alliance Global Group Inc.
said that it would still hit double-digit growth in profits this
year as it launches several projects to widen its revenue base.
On the sidelines of its stockholders meeting,
Kingson Sian, Mega-world Corp. executive director, told reporters
that the firm’s net income at end-December would still grow by 26
percent to P3.8 billion year on year. Reservation sales at end-May
were 70 percent up from a year ago while direct overseas
sales—about 10 percent of the total—jumped by 158 percent.
The company’s overseas market has expanded
despite the global slowdown brought about by the credit crunch and
US sub prime mortgage crisis. Sian said sales from its US market
expanded from last year but its growth was outpaced by the Asian and
Middle Eastern markets.
Asia’s contribution to total overseas revenue
grew from 34 percent in the first five months last year to 38
percent this year while that of Middle East grew from 1 percent to
25 percent over the same period. The North American market’s share
however shrunk from 53 percent to 28 percent year on year.
To cover for the rise in construction costs,
Megaworld will implement a 10-percent to 20-percent hike in
residential unit prices on August 1. This is on top of the periodic
price increases that the company undertakes after a certain
percentage completion of a project.
Sian is still bullish about the local
real-estate industry even if rising raw material prices have begun
squeezing companies’ margins. He said the situation is far from
crisis proportions, citing the situation in 1997.
“Banks are healthy. The corporations are still
healthy and a corporation like ours have a lot of cash and very
little debt. Not only us but many are in the same situation. Most
important, the people that are buying have jobs. This year’s
official government [economic expansion] estimate is at 5.5 percent
to 6 percent. The economy is still going to grow. This means jobs
will still be created and there will hardly be massive lay-offs,”
the Megaworld executive said.
He said buyers are end-users and also invest in
real properties as a hedge against inflation, therefore the risk
that they will default on their payments “is very low.”
“We are not in an Asian financial crisis
scenario at this point,” he added.
The company is launching 17 new projects this
year with an estimated sales revenue of P26 billion. For the first
five months Megaworld already launched One Central at the Makati
central business district with an estimated sales worth of P5.5
billion, Parkside Villas in Newport City, Parañaque, worth P3
billion and Morgan Suites in McKinley Hill, Fort Bonifacio, worth P1
billion.
The company has earmarked P12 billion to fund
its projects in 6 “mega-communities,” which include Eastwood
City in Quezon City, Mckinley Hills and Forbestown Center in Taguig
City, Manhattan Garden City in Quezon City, Newport City in Pasay
City and Cityplace in Manila. Megaworld said it is also looking to
expand into Iloilo City and Mactan, Cebu, within the year.
It also bought three subsidiaries of Ayala Land
Inc. for an aggregate amount of P902 million so that it can develop
a property along Valero and de la Costa streets in Salcedo Village,
Makati. The firm said it plans to construct a mixed-use development
with mostly residential buildings.
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