Ayala Land bullish on Cebu’s economy

BOBBY NALZARO

BOBBY NALZARO

Bobby Dy (CDN PHOTO/VICTOR SILVA).

Ayala Land, Inc. (ALI), Ayala Corp.’s real estate unit, remains bullish on Cebu’s economy and continues to roll out estates all over the country despite the anticipated increase in US Fed rates this December.

Bobby Dy, company president and chief executive officer, said they have earmarked around P85 billion for all their projects in 2016 and that their plans will remain as is even amid a looming interest rate hike by the US central banking system.

“We’re not doing a reforecasting of plans because of the interest rates increasing. We continue to go flat out. We’ve been rolling out our estates all over the country and continue to prime our new estates. That will continue, so as of now, no changes in plans,” he told reporters following the announced rebranding of the Ayala group’s business units in Cebu City this week.

Fed chairperson Janet Yellen earlier announced a hike in interest rates by 25 basis points or 0.25 percent come mid-December this year, a move that forms part of the system’s process of monetary policy normalization which began in the same month in 2015.

This came five years after the US Fed implemented the Zero Interest Rate Policy (ZIRP) and quantitative easing to stabilize the economy after the financial crisis in 2008.

Low interest rates make it easier for businesses to expand, leading to the creation of more jobs and greater consumption.
The Philippines was among the emerging economies that enjoyed the benefits of ultra loose US monetary policy then, and due to record-low US interest rates, local interest rates fell as well, prompting a boom in the property market.

Higher interest rates and inflation, on the other hand, normally dampen demand in the housing sector. On a 30-year loan at 4 percent, for example, home buyers can currently expect at least 60 percent in interest payments over the duration of their investment.

Dy said that if the US moves interest rates, this would put pressure on the Philippines to move its interest rates as well, but he believes that no one would forecast any significant increase in interest rates and that these numbers are manageable.

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