ABOITIZ Land Inc., the property-development unit of Aboitiz Equity Ventures Inc. (AEV), said it will spend about P25 billion in the next five years, or an average of P5 billion annually, to enlarge its industry-market share that has been limited to its area in Cebu.
Andoni Aboitiz, the company’s president and CEO, said part of Abiotiz Land’s five-year plan is to substantially increase its revenue contribution to its parent company.
“I do not want to be 3 percent of AEV’s revenues for the rest of my life. I do not exactly know by how much we want to grow the business, but the mandate is to really grow substantially. So that means, a very steep increase,” Aboitiz said.
“For the year, we have earmarked P5 billion in capital spending and, if we succeed in what we are doing and we will know in the next six months to eight months, then I do not see why we should not be investing about that much [P5 billion] every year to keep on growing and growing,” he said. “If the sales and our growth are even higher [in the succeeding years], then we will push the envelope even more.”
For the year, half of company’s P5 billion capital expenditure (capex) will be spent for its Luzon developments, outside Metro Manila, while the remainder will be spread out across the country where it has developments.
“We think a provincial play is the way to grow,” he said.
Last year the Cebu-based firm only accounted for 3 percent of AEV’s business, earning about P536 million, 15 percent lower than 2014’s P633 million, as it continues to ramp up its spending for land acquisition and developments.
Aboitiz said the P5-billion capex this year will be spent for a series of land acquisitions and for construction of various developments, such as residential, commercial and industrial. “We are going for residential, commercial and industrial; these are all geared for expansion. But our focus remains on the residential developments, house and lot because it remains to be a very big market and it is the most scalable business,” he said.
Aboitiz said the residential development would primarily cater to housing requirements of the middle-income market, and would be sold as a house and lot rather than high-rise buildings. “The big guys are already in the condominium business. We want horizontal development rather than vertical,” he said.
The price range of the house and lot that the company will offer is between P2.5 million and P3.5 million, with average lot area of about 100 square meters (sq m) to 120 sq m, and a floor area of 80 sq m to 100 sq m, depending on the area of development.
