Villar: Rise in rates will not affect Vista Land

Posted at 07/11/14 7:59 AM

MANILA -- Vista Land & Lifescapes Inc., the Villar group's property-development firm, said it is unfazed by prospects of rising interest rates, as most of its buyers are end-users, thus, shielding the company from the speculative market.

Vista Land Chairman Manuel B. Villar Jr. told reporters that a minimal increase in interest rates, in response to the higher consumer prices, will not affect the publicly listed company that sells mostly house-and-lot units.

“Vista Land, in particular, will not be affected by an increase in interest rates because we cater to the end-user market. It is the speculative market that is sensitive to interest rates,” Villar said.

“We are used to high rates. We have been in the housing business for a long time and we continued to grow even when interest rates were at double digits,” Villar, a former senator, said. He said since most of the company’s buyers are end users, Vista Land is not prone to speculation shocks.

End users refer to families who buy homes for their own use. “Our buyers are people who want their own homes,” he said. “They are not the ones who are buying real estate with the intent of leasing them out or selling them for a profit later.”

An increase in interest rates will reduce the yields from speculative investments, especially when demand for leased units slackens, he said.

About 60 percent of Vista Land’s buyers consist of overseas Filipinos.

Should interest rates go up, the increase will not be as much since rates will still be very low, he said.

“[The rate would go up], maybe half or a fourth of 1 percent. Even then, the deposit rates will still be low so people will still invest in a property,” he said.

For the first quarter of the year, Vista Land’s net income increased by 11 percent to P1.5 billion. Consolidated revenues reached P5.4 billion, reflecting a 12-percent growth from P4.9 billion a year ago.

Villar said reservation sales during the first quarter hit almost P13 billion, “which confirms our reading that demand for housing all around the country continues to be very strong.”

For the period, the company launched 13 subdivision developments with a total value of P8 billion, of which 12 are low-cost housing projects. These subdivisions are in Agusan del Norte, Bacolod City, Bataan, Batangas, Bulacan, Cebu, General Santos City, Palawan and Tarlac.

Vista Land is also exploring opportunities to develop new income streams from recurring sources, such as commercial centers, which are being built in select Vista Land communities.

For more BusinessMirror stories, go here.