MASS-housing builder 8990 Holdings Inc. on Monday said it plans to spend some P3 billion in capital expenditure (capex) next year to fund construction of its projects and buy land to replace those it will use for property development.
8990 Holdings President Willibaldo Uy said the amount was 50 percent more than its target capex of P2 billion for this year.
“The capex will mostly go to the construction of high-rise projects and for land banking,” Uy told reporters in an interview. He was referring to the firm’s Ortigas Avenue Extension project, which has been delayed for more than a year.
The company is building a complex composed of 33,000 units in 24 12-floor buildings. Both these projects would have a full-sized community mall called Deca Mall.
“The mall operation is actually good,” Uy said. “This is going to be new to us, and it shows potential for the company.”
The company is currently finishing construction of a complex of buildings in Tondo, Manila, which will also feature a mall.
8990 Holdings said it will have a total of four more projects next year, aside from the Ortigas Avenue complex. One will be in Cebu, another in Iloilo and two in Davao.
Uy, however, said its complex of buildings in Ortigas Avenue will only be started in the latter part of 2018.
As part of its strategy, 8990 Holdings is building medium- to high-rise buildings in Metro Manila and horizontal projects in provinces.
The company is also looking to spend some P3 billion for the development of a 3.4-hectare property in Las Piñas and is working on a project in Cubao, Quezon City.
At the moment, the company has about 554 hectares of land bank. 8990 Holdings said it will purchase more this year but will only replace those that it will use for development.
The company said its income for the third quarter of the year grew 9 percent to P1.2 billion, from last year’s P1 billion, a sign that the company’s earnings are starting to recover.
Third-quarter revenues grew 29 percent year on year to P3.1 billion, from P2.45 billion last year on strong housing demand in all its projects across the country.
This brings revenues for the first nine months to P6.1 billion down from last year’s P7.18 billion. Still, the company said it is on track to meet its full-year target of at least P10 billion.
During the first two quarters of the year, the company’s earnings fell as a result of slowdown in its project launches.
“Momentum has shifted to create a turnaround in our third quarter revenues. 8990’s presence in Luzon, the Visayas and Mindanao allows us to easily capture the growing affordable housing demand across the country,” Uy said.
“The real challenge for us now is keeping up with the ever-growing housing demand, which so far has resulted in a housing backlog of 5.9 million. This quarter, we saw how fast the market can absorb readily available units in developments, such as Iloilo and Manila,” Uy explained. “Once we started completing units and securing permits, we saw number of units sold in Iloilo go up by 204 percent, while recognized units sold in Manila nearly doubled from what it did in the first half of 2017.”
A total of 4,431 units were delivered in the first nine months of the year, with Luzon contributing 59 percent of the total, followed by the Visayas regions with 30 percent and Mindanao with 11 percent.