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MANILA - In the end, there can be only two property companies lording it over the market.
Jones Lang LaSalle Leechiu said Ayala Land Inc. and SM Development Corp. stand to benefit the most from the current boom.
David Leechiu, JLLL country manager, told Interaksyon.com that it may be more difficult for smaller property developers to compete with ALI and SMDC, both of which are gaining market share at the expense of their rivals.
"You have one giant which entered the market four years ago that went from zero to become the biggest condo developer in every metric. You've got this other giant that was considered to be fairly dormant and is now very aggressive," Leechiu said.
"What that has done is SMDC and Ayala Land have increased market share which means that they will make it harder and harder for everyone to sell," he added.
From a net income of P57 million in 2007, the Henry Sy-led SMDC has grown into a P4-billion company last year with 17 projects across the metropolis.
With Antonino Aquino at the helm, ALI has transformed from a builder of high-end residential projects to a "developer for all people" with brands across all income segments of the market. By 2014, the firm aims to post earnings of P10 billion with a return on equity of 15 percent.
"Some companies may say, 'we're concerned there is a glut.’ But then they have to ask themselves this: Is there really a glut or is it because they are not being able to compete anymore or it's getting harder and harder for them to compete with these giants?" said Leechiu.
Data provided by JLLL showed that Megaworld Corp. dominated the condominium scene from 1999 to 2011 with a market share of 19 percent, while DMCI and Cityland each cornered 12 percent of the market.
But by 2016, SMDC is seen to account for 22 percent of the condo market with Megaworld and ALI having 18 percent and 9 percent, respectively.
"You'll see Ayala Land and SMDC dominating land banking and sales efforts. You'll see other developers moving to other niches where Ayala Land and SMDC are not yet too involved to differentiate themselves or they'll be happy to just keep what they're doing," said Leechiu.
JLLL sees no let up in the demand for residential products and the two giants are aware of this, as they embark on aggressive land banking initiatives.
ALI and SMDC separately are wooing the Ortigas group, which has a vast land bank in the metropolis. Both companies are also expected to submit their bids for the 74-hectare Food Terminal Inc. property in Taguig.
"There are 15 large- to mid-scale developers that are scrambling for properties. They don’t want to buy a 2,000-square-meter property. They want to buy two, three, four hectares because they need that to feed their company, their buyers, their agents, their investors. Is the demand there? Yes the demand is very significant," Leechiu said.
From the time of the 1997 Asian financial crisis until 2008, the economy stood still and property firms slowed down on their project developments. It was only three years ago when real estate firms recognized the pent-up demand in housing and aggressively built developments that had them wiping out a big chunk of their land bank, Leechiu said.
"Despite the growth in supply of condos, the market is sucking them up. They are buying every single piece that's being constructed and they're doing it because it's affordable and because they need to. The condo market's going to keep chugging along because demand is there," he said.
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