The LT Group-Ayala Land tieup

The news about the marriage of Ayala Land Inc. and the Lucio Tan Group in a property development venture sets forth a new paradigm in investments in the country: business rivals can become business partners. And this initial partnership between the two erstwhile business competitors could translate to other bigger things. 

For that initial venture, which involve two properties in Pasig and Quezon City that LT Group’s Eton Properties own, could evolve into other real estate development partnerships not only here in the Philippines but also in other places, namely: Hong Kong, Guam, Papua New Guinea and China where Eton has sizeable holdings.

Here in the Philippines, along the stretch of South Luzon Expressway, sits a big property that Eton owns and this could become another area for business partnership between the Ayala and Lucio Tan groups.

In Hong Kong, Eton has a property development atop the Happy Valley, where the race track is located and that means pricey lots, while in China, it has a huge property development in Pudong, which is being transformed into another Shanghai. And in Guam, Eton has a two-story shopping complex opposite that of the six-story Guam Medical City Regional Hospital.

That Guam property is ripe for a major redevelopment with the rezoning of the place allowing six-story buildings and that means a huge business opportunity for the business partnership should it extend to other domains.

The disclosure of the business partnership between the Ayalas and the Tans could have come about as a result of the delisting of Eton Properties from the Philippine Stock Exchange. That delisting had worried investors who were banking on the profit potential of the huge land bank of the Lucio Tan subsidiary when they bought shares in the stock exchange.

This partnership gives credence to stock-market analysts’ expectations that the property market is due for a big rebound because of good macro-economic fundamentals for the country. Aside from the property market, market analysts cite the possible resurgence of the power sector. In fact, the property and power sectors are seen to post double-digit growths compared to other industry sectors.

The property sector is seen to rise by 18.3 percent, according to Papa Securities Corp. analysts, while the power sector is expected to turn in a growth rate of 17.6 percent due to recurring income and capacity expansions, respectively. This compares with the forecast of a 13.4-percent growth for the listed stocks in the Philippine Stock Exchange, up from last year’s rise of 7.4 percent.

Cited as reasons for the higher expectations of earnings are the” better macro-economic backdrop” for the country such as the expected gross domestic production growth of 6.5 percent due to the elections, higher public spending, especially on infrastructure, and stronger business process outsourcing revenues. BPO is now about to rise to the level of the overseas Filipino workers’ remittances of $2 billion a month, and that means higher consumption patterns.

For tycoons Lucio Tan and Fernando Zobel de Ayala, the partnership is a welcome event and the two posed for photos in forging their business partnership. That is how important the link-up is between the two companies. Actually, the two are to jointly develop a 35-hectare town project with integrated and mixed-used facilities located in Pasig City and Quezon City. According to Bernard Vincent Dy, ALI President and CEO, the conglomerate is “looking forward to a successful partnership with the LT Group.”This partnership will allow ALI and LTG to combine their capabilities to develop the project, he added. Dy also said the partnership bodes a shared vision and this statement could give us a glimpse of things to come.

“Our shared vision and commitment to this project will open new opportunities for economic growth, which will contribute to the development of the community,” the ALI president said while Tan likewise expressed enthusiasm for the joint venture. Tan said: “We are very pleased to be entering into a joint venture with ALI. This project will be a perfect addition to the growing portfolio of Eton Properties Philippines, Inc., the property development arm of LTG. We believe that this is an excellent partnership that will enable us to build an outstanding mixed-use development which will offer a wide range of property investment and lifestyle options to customers.”

With the statements pregnant with meanings, can the partnership in other countries be far behind?