2016 Reported Income of Philippine Real Estate Developers

2016 Reported Income of Philippines Real Estate Developers

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How much did the Philippines’ noted real estate developers earn in 2016?

While contentious in some respects, 2016 can be considered a productive year for the Philippines. Despite the transitional challenges typical of any new administration, the country has been more than able to maintain its economic growth, which international real estate consulting firms like Colliers International and JLL predict will continue at a rate of 6.2–6.9 percent in 2017.

The prospect of continued growth has seemingly been enough to encourage real estate developers to launch more projects, with many boosting their revenue streams from various property offerings.

The following is how much some of these developers faired in 2016, sourced either from the most recent financial reports they have made with the Philippine Stock Exchange (PSE), or financial disclosures shared with the press or posted on their own official websites.

The Usual Leaders

Evident from even just the numbers for the first three quarters of 2016 alone, Ayala Land and SM Prime Holdings, and their respective subsidiaries, continue to maintain the lion’s share of earnings among real estate developers in the Philippines.

Considered the largest and most diversified property developer today, Ayala Land’s net profit remains the highest in the country, thanks to a core business that includes land-bank management, residential development, shopping centers, corporate businesses, and hotels. In a press release made in September 2016, Ayala Land emphasized its plan to expand its already diverse property offerings within its current roster of 19 integrated mixed-use developments nationwide.

Although with a similarly diverse core business, SM Prime is most recognized for its being the largest shopping mall and retail operator in the Philippines, with a current inventory of 57 malls in the country and six in China. These have been the primary earners for the company. SM Prime’s residential group, led by SM Development Corporation (SMDC), on the other hand, is what continues to cover around a third of the developer’s income.

Another in the mall business is Robinsons Land Corporation, which reported a 7.88 percent increase in its net income for its fiscal year ending September 2016, mainly driven by its 44 malls. The real estate arm of JG Summit Holdings Inc., Robinsons’ resume as of the end of its most recent fiscal year includes 79 residential condominium buildings and other housing projects, 13 office projects, and 15 hotel properties in the country.

A leading urban township developer that has already launched integrated townships, more than 200 residential buildings, office towers, commercial centers, and hotels, Megaworld Corporation continues to enjoy a growing annual net income. It must be noted that while not having the topmost earnings, Megaworld also has associates like Suntrust Home Developers, Inc. and subsidiaries such Global-Estate Resorts, Inc. listed and reporting income independently.

While rental revenue is the more predictable component of a company’s revenue, real estate revenue is often what most influences the difference in past and present incomes, as evidenced by developers like Vista Land, Filinvest, and Anchor Land. These and other developers have enjoyed a significant increase in net income, thanks greatly to the completion of their sold inventories and the sale and construction of newer properties.

2016 Reported Income of Philippines Real Estate Developers

Comparable Declines

Conversely, some developers have experienced a decline in their 2016 net income due to significant portions of their revenue being reported in the years prior. Such is the case of Century Properties, which has experienced an almost 50 percent decline in net income, as most of its project completions occurred in 2015, with 2016 having seen less pre-sales and project launches.

A similar situation is that of DMCI Homes’, which has reported seeing its 2016 net income to be significantly lower than the previous year due to many of its residential spaces still being due for completion. The practice of the company to only recognize earnings from residential sales only when the associated project is complete and successfully turned over is also contributory to the decline, but is also indicative of expected earnings for the company in the next few years.

Other reasons for the decline of income typical of real estate developers is the expense associated with expanding land banks and launching new real estate projects. Such is the case with green builder Italpinas Development Corp., which in mid-2016 launched Primavera City in Cagayan de Oro in, and finished designs for Miramonti in Batangas. The former is reported to entail an investment of Php670 million, while the latter between Php600 and Php800 million, once completed.

Declines in net income can also be attributed to expenses companies incur in other industries outside of real estate that they are involved in. While A. Brown Company Inc. has no present real estate projects being built, it has partnered with the local arm of a Malaysian infrastructure conglomerate to embark on a railroad project in Cagayan de Oro, and energized one of its power transmission lines in Iloilo.

While majority of the Philippine real estate sector has enjoyed growing, or at least positive, income, some have also incurred losses. With regard to companies like Primex Corporation, it focused its finances in the successful pre-payment of its loan obligations to Metrobank and BDO. Philippine Realty and Holdings Corporation, on the other hand, has spent most of 2016 lowering its net losses.

*As not all publicly listed real estate developers have published their full financials for 2016, bookmark this page for updates on their complete annual net incomes for the year.

Sources: edge.pse.com.ph, pds.com.ph, ltg.com.ph, business.inquirer.net, bworldonline.com, businessmirror.com.ph, manilatimes.net, bloomberg.com, manilatimes.net, philstar.com, ayalaland.com.ph, eton.com.ph

Main image via Shutterstock

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