MANILA - Leading property company Ayala Land Inc. is continuing its expansion into markets that it had snubbed before: the low income housing segments.

In a disclosure on Friday, the Ayala family-led developer said that its board has approved the creation of a wholly-owned subsidiary “to pursue a planned expansion of our residential development operations to cater to the country’s economic housing segment.

The Ayala brand has long been associated with high-end and high-quality residential and commercial property development projects where profit margins are fatter.

In recent years, however, it has started to penetrate middle income classes with residential units priced between P2 to P5 million each.

The new subsidiary will cater to a lower income segment where home units are in the range of P600,000 to P1.25 million each.

These are referred to as “starter homes,” or those that the young and “emerging households” will find affordable.

Ayala Land earlied said it will issue a P504 million "homestarter" bond offer to encourage low to middle-income families to save funds to buy properties in the future

This segment has long been the turf of other players, including the former C&P Homes which has spawned the wealth of Senator and 2010 presidential aspirant Manuel Villar.

Villar’s real estate companies has been re-organized into an umbrella company, Vista Land and Lifescapes. The listed company’s housing portfolio has not been confined to the low and affordable income segments, but also to the high-end and luxury segments.

New subsidiary

The new subsidiary will be the fourth of the Ayala Land housing portfolio, which now includes Ayala Land Premier, Alveo Land and Avida Land. The different market segments—both for horizontal and vertical projects—are catered to by these brands.

Ayala Land said the new subsidiary will be infused with fresh capital worth P1.08 billion over the next 3 years. It said this amount will be used to fund operating expenses and acquisition of potential landbank.

Initial projects under the new subsidiary will include 6 projects in select industrialized rural areas in Southern and Central Luzon “where the end-user demand is expected to be strong.”

The first project will be launched in the first quarter of 2010 “on a 20-hectare lot currently owned by the Company.”