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MANILA, Philippines - Robinsons Land Corp. (RLC) is turning to its office leasing, shopping centers and hotels businesses to drive growth, as the supply of housing units outpaces demand.
The company told its shareholders on Wednesday that the property sector is experiencing “fierce competition in the residential market, with more developers offering aggressive financing to their buyers, and allowing buyers to move in with minimal equity payments.”
“Deciding to take a more conservative stance on the residential business, our company will instead intensify its focus on our investment portfolio which will expand our recurring income base,” RLC officials said in their note to shareholders.
“For 2012 we are aggressively expanding our shopping centers, offices and hotels, which brings our recurring income higher. That’s the highlight of our company, building out more malls,” Frederick Go, RLC president and chief operating officer, told reporters on the sidelines of the annual stockholders meeting.
About 66 percent of RLC’s revenues come from its investments in office leasing, malls and hotels, bringing in about 81 percent of the company’s profits.
“There’s a lot of new projects in the market and a lot of new players in the market. The balance between supply and demand is now not balanced,” Go added.
Because of this, RLC told its shareholders that it will be more selective with its land banking and product launches.
Next year, the company will open four new malls and expand two existing ones, even as it continues to scout for properties where it can build new shopping centers.
It is also rolling out its budget Go Hotels, five of which will start operation by the middle of this year in Mandaluyong, Puerto Princesa, Dumaguete, Tacloban and Bacolod. These new hotels will bring an additional combined room inventory of 640.
RLC is also building Summit Hotel brands within the metropolis. It now has Summit Ridge Tagaytay and Summit Circle Cebu.
Its hotels in the international deluxe category, Crowne Plaza Galleria and Holiday Inn Galleria, continue to record 72 to 74 percent occupancy rates.
Go said the hospitality industry is growing since “there are more rooms in the market but occupancy rates continue to be stable.”
For this year, RLC is allotting between P2 and P3 billion of its P13 billion capital expenditure for land acquisition, down from last year’s P6-billion budget.
The rest of the company’s capex will go to construction of real estate projects.
To date, RLC has 29 malls with 813,000 square meters of gross leasable space and at least 94.5 occupancy rate and steady same-mall revenue growth at eight percent.
Its office leasing business has a total of 194,000 square meters for its eight buildings and 99 percent occupancy rate.
RLC launched 15 residential projects last year across four residential brands, all of which were valued at P8 billion.
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