Good afternoon, everyone, welcome to Ayala Land's Full Year 2024 Analyst Briefing. I am Blase Aquilizan from Investor Relations. Let me start by recognizing our panel, led by our President and CEO, Ms. Meean A. Dy. CFO and Treasurer, Mr. Toti Bengzon. Mr. Mike Jugo, Head of the Premium Residential Business. Ms. Mariana Zobel de Ayala, Group Head for Leasing and Hospitality. We would also like to recognize other members of our Management Committee in the audience, Mr. Darwin Salipsip, Group Head of Construction Management. Ms. Raquel Cruz, Head of the Core Residential Business. Ms. Isa Sagun, Chief Human Resources Officer. I am pleased to announce that we also have a strong turnout from our virtual audience, with over 80 on the call. Please note that a copy of the presentation is available for download at ayalaland.com.ph.
For questions we may not be able to address on the floor, we will email you directly. Without further ado, I turn over the floor to Mr. Bengzon.
Good afternoon. Before I start, let me just say that we have good news and not-so-good news. Which one would you want to hear first? The not-so-good news was the country's growth rate was 5.6%, lower than the 6% we were expecting. Now for the good news. Next slide. We said we'd grow the company's bottom line by 2x GDP. We exceeded that. Net income came in at PHP 28.2 billion. That's 15% higher than the previous year. The company achieved solid growth across our business lines despite the challenges that we faced in the operating environment. This was anchored on the strength of our diversified portfolio. Our consolidated revenues reached its highest mark to date at PHP 180.7 billion. This is 21% higher year-on-year and 7% higher than our previous high water mark of PHP 168.8 billion in 2019.
Net income, PHP 28.2 billion, 15% higher than a year ago. CapEx of close to PHP 85 billion, mostly going to the build-out of our Property Development projects, estates, and Leasing and Hospitality assets. We ended the year with a very strong balance sheet. Net gearing ratio of 0.73:1, which is actually lower than the 0.75:1 of the previous year. By revenue segment or by business segment, revenues from our property development business grew by 22% to PHP 112.9 billion, driven by higher residential and commercial and industrial lot bookings. Residential revenues grew by 23% to PHP 94.9 billion, while combined office and lots for sale revenues grew by 19% to PHP 18.1 billion, while standalone commercial and industrial lot revenues jumped by 34% year-on-year. Our leasing and hospitality revenues reached PHP 45.6 billion.
This is 9% higher, owing to the contribution of our new assets, namely One Ayala Mall and Office Towers, Ayala Triangle Tower two , and Seda Manila Bay. Both shopping center and office leasing revenues grew by 9% to PHP 23 billion and PHP 12.9 billion respectively, while hotel and resort revenues reached PHP 9.7 billion, up 11% year-on-year. Our service businesses, composed of construction, property management, and other ancillary services, registered a 57% growth to PHP 18 billion on account of additional contracts from external projects and stable property management fees. Net construction revenues nearly doubled to PHP 13 billion versus the same period last year, while property management and other ancillary services were steady at PHP 5 billion. Moving on to the detailed breakdown of our income statement. Real estate revenues reached PHP 176.5 billion.
This is 21% higher from last year, driven by higher residential and commercial lot bookings, additional contracts from external construction projects, and healthy leasing operations. Interest and other income increased by 25% to PHP 4.2 billion on account of growth across the three subcomponents. Namely, equity and net earnings of associates and JVs ended up 29% at PHP 2 billion, as our joint ventures with the Eton Group, FBDC companies, and Ortigas Land recorded higher earnings. Interest and investment income climbed by 22% to PHP 884 million, reflecting the higher yields generated from our short-term investments and cash deposits. Other income amounted to PHP 1.3 billion. This is 22% higher year-on-year on higher management fees, primarily from FBDC. Meanwhile, turning to expenses, total expenses grew by 23% to PHP 138 billion.
With construction activities in full swing, our real estate expenses totaled PHP 111.8 billion, up 26%. While general and administrative costs were managed with a modest increase of 3% to PHP 9.2 billion. Our G&A ratio has improved now at 5% versus the 6% we registered last year or in 2023. EBIT margins stood at 33%, one percentage point lower than 2023's, but well within our target range of maintaining EBIT within the 30%-35% range. Our interest expense, financing, and other charges came in at PHP 17 billion. This is 14% more than last year due to a higher average borrowing rate and daily loan balance. Likewise, income before tax grew by 17% to PHP 42.8 billion. This increase translated to an income tax provision of PHP 8.5 billion, 14% higher year-on-year. This translated to an average effective tax rate of 20%.
Income before non-controlling interests stood at PHP 34 billion, 18% higher than last year, while non-controlling interests from our JVs and associates increased by 34% to PHP 6 billion. Deducting this from our consolidated net income, net income after tax attributable to ALI equity holders grew by 15% to PHP 28.2 billion. Turning to our revenue breakdown by business segment. Property development revenues rose by 22% to PHP 112.9 billion. Putting some color to this, residential revenues accelerated by 23% to PHP 94.9 billion on higher bookings across premium and core brands. Office for sale revenues, however, declined 18% year-on-year to PHP 3.5 billion on lower incremental percentage of completion recognition, which offset the new bookings that we recorded during that period. Meanwhile, revenues from commercial and industrial lots jumped by 34% to PHP 14.6 billion, driven by lot sales outside of Metro Manila.
These were mainly from Nuvali in Laguna, Laguindingan Technopark in Misamis Oriental, and Azuela Cove in Davao. Revenues from our leasing and hospitality business reached PHP 45.6 billion. This is a 9% improvement year-on-year on higher rental rates and the contributions of newly completed assets. Despite our ongoing reinvention initiatives, our shopping center revenues advanced by 9% to PHP 23 billion due to the higher average rental rates as well as the full- year contribution from Ayala Malls One Ayala and the improved operations of Ayala Malls Manila Bay. Office leasing revenues also grew by 9% to PHP 12.9 billion from increased rental rates and the contribution of our One Ayala BPO Towers and Ayala Triangle Tower two.
Hotels and resorts revenues reached PHP 9.7 billion, up 11% year-on-year owing to higher average room rates and the contribution of new rooms at Seda Manila Bay and Seda Nuvali Tower Two. Our service businesses, composed mainly of construction, property management, and other ancillary services, grew by 57% to PHP 18 billion. This was primarily driven by MDC nearly doubling its net construction revenues to PHP 13 billion on account of its external contracts, mainly from the 50 MW ePLDT Data Center project in Santa Rosa, Laguna. Summing up the top line, real estate revenues amounted to PHP 176.5 billion. This is a 21% growth from last year, coupled with interest and other income of PHP 4.2 billion. Total revenues grew by 21% to PHP 180.7 billion. Moving on to our margins. We have managed our operating margins, which all fall within our investment targets.
On the property development side, GP margins for horizontal residential projects stood at 43% and 37% for vertical residential projects. Our target for horizontal GP margins would be in the mid-40s and our vertical GP margins in the mid-30s. Both well within our targets. Office for sale margins were at 48%, higher than 43% last year or the previous year due to higher selling prices, while margins of commercial and industrial lots remain stable at 65%. For our leasing and hospitality, EBITDA margins steady for shopping centers, 1 percentage point lower due to our ongoing reinvention initiatives. Offices stood at 90%, while hotels and resorts were at 27%, down by 2 percentage points, primarily on account of our reinvention works. Finally, the EBITDA margins for service businesses was at 6% owing to the impact of certain quality-focused initiatives. Let's start with the operating metrics.
Let's start with the residential sales. Let's start with residential sales, part of the property development business. Notwithstanding headwinds in the Metro Manila condominium space, we achieved residential sales of PHP 127.1 billion. This is up 12% year-on-year, anchored on resilient demand from the premium residential segment, horizontal projects, and developments in our suburban estates. Sales from our premium brands, Ayala Land Premier and Alveo, jumped by 25% year-on-year to PHP 80.8 billion, accounting for 64% of total sales. By product type, we saw an increased demand for horizontal lots and house and lot offerings, which ended 16% higher than a year ago, or higher than 2023 levels. Demand for developments outside of Metro Manila remained robust with take-up accelerating 14% from 2023 levels and now accounting for 46% of total sales reservations.
Sales during the year were led by the following projects: Ayala Land Premier Park Villas in the Makati CBD, Alveo Park East Place in BGC, The Ametrine at Portico, Caleia in Vermosa, Cavite, and Sereneo in Nuvali. Turning to our portfolio buyer profile, 72% of our sales came from local Filipinos, which notably grew by 20% year-on-year to PHP 91.6 billion, further underscoring the strength of the domestic market. However, sales from overseas Filipinos and other nationalities declined by 8% and 2% year-on-year respectively, to PHP 21.6 billion and PHP 13.9 billion respectively. In the fourth quarter alone, combined sales from these two segments declined by 23% compared to the third quarter. We attribute this decline to two factors.
First, on the supply side, we lacked inventory in the core segment, which is the preferred product of these buyers. We launched quite a bit of the inventory late in the fourth quarter, namely in December. Second, there were demand uncertainties brought about by the U.S. elections, which created cautiousness in the overall market sentiment. Next slide, please. Starting this reporting period, we wanted to provide more color on lot sales from our mixed-use and industrial estates to give you a holistic view of sales take-up from our property development portfolio. In 2024, sales of commercial and industrial lots amounted to PHP 14.7 billion, surging 52% from the previous year and contributing 10% to total take-up. Combined with residential sales reservations, total property development sales grew by 15% to PHP 141.8 billion. Just some of the notable launches we had last year.
We did revise our launch target for the year to PHP 80.5 billion, with 70% coming from the premium segment and 30% from core. Launches in our core segment were deliberate and tactical, focusing on specific locations with low existing inventory and underserved demand. Of these core launches, only two projects were located in Metro Manila, representing 46% of the total launch value of the segment. By product type, 65% of our total launches were horizontal developments, by location, 66% were in our suburban developments. Notable launches during the year include Ayala Land Premier's Enara in Nuvali with a PHP 15.5 billion launch value. They were able to generate PHP 2 billion in sales in one weekend. Avida's Makati Southpoint Tower two, our first Avida vertical offering in Metro Manila since 2022 with a value of PHP 6.3 billion.
Avida Serin Terraces, a townhouse offering in Tagaytay, worth PHP 3.1 billion. Anvaya Searidge Residences Buildings A and B with a total value of PHP 3.1 billion. Building A is 79% sold. With that successful take-up, we immediately launched the sequel tower, Building B. These launches will provide the sample inventory to sell in the succeeding quarters. Okay. Turning to our leasing and hospitality businesses. Higher and stable occupancy drove our healthy leasing operations. Our total malls GLA at 2.1 million square metres had a lease-out rate of 90%, at par with 2023 levels. We have a total pipeline of 707,000 sq m of GLA, which includes projects currently under construction and under planning.
For offices, total GLA of 1.4 million square meters with a lease-out rate of 91%, slightly lower than the previous year as we opened two new office buildings with a total GLA of 47,000 sq m . In terms of tenant mix for our office portfolio, 79% is leased out to BPOs, 12% to corporates, and zero exposure to POGOs. Our vacancy rate stands at 9%, significantly better than the industry's vacancy rate of 20%. Our total office pipeline stands at 362,000 sq m . Hotels and resorts, we have a total of 4,267 rooms. Occupancy continues to be healthy. The average occupancy for all hotels stood at 67% and 43% for resorts, a 2 percentage point increase from the previous year. Total number of hotels and resorts room in the pipeline stands at 4,058 rooms.
We opened 72,000 sq m of commercial leasing space in 2024 to further bolster our recurring income base. For offices, we opened Park Triangle Corporate Center BGC and the South Tower of One Ayala, which is a headquarter type building. These were opened in the third quarter and are now 67% and 66% leased out respectively. That totaled 47,000 sq m of additional office space. We also opened an additional 25,000 sq m of GLA at our Ayala Malls Vermosa in Cavite. CapEx spend came in as per our revised guidance of PHP 85 billion, PHP 84.6 billion, of which 46% were spent on residential projects, 27% on estate development, 15% on leasing and hospitality assets, and the balance of 12% on land acquisition commitments. We have a well-managed debt position with 93% contracted into long-term tenors.
Average maturity is now 4.9 years, we were able to maintain our average borrowing cost at 5.3%. We also wanted to highlight some notable achievements last year. We did the first sustainability-linked financing program, raised PHP 28.2 billion, PHP 14 billion in sustainability-linked bonds, and PHP 14.2 billion in sustainability-linked loans with the IFC. IFC, sorry. The balance sheet remains fortress-like. We had a net gearing ratio of 0.73: 1. Even as borrowings increased by 9% to PHP 282.2 billion, our stockholders' equity increased by 12% to PHP 358.5 billion. Current ratio improved to 1.75x, and our interest coverage ratio is 5.1x higher than the S&P's prescribed range for investment-grade property companies of 3x-6x . Just to summarize our performance for 2024, revenues reached our highest mark to date at PHP 180.7 billion, 21% higher year-on-year.
Net income 15% higher at PHP 28.2 billion, CapEx of PHP 85 billion, we ended 2024 with a very healthy gearing ratio. That's all, thank you very much. I will now turn you over to our CEO for her key messages.
Thank you very much, Toti, and good afternoon to everyone. Just a few points that I'd like to share before we pass this on to Mariana and to Mike for their presentations. We ended the year on solid footing despite the challenges of 2024. The CFO already went through the details of our financial performance, so I will not go over it again. Much has been said about the inventory overhang in the industry and the abundance of RFO units. Our early and proactive risk management has resulted to much lower and higher quality inventory. We ended the year with an inventory level of 22 months after we launched PHP 29 billion worth of product in December. Prior to the spurt of launches and as of end November, our inventory levels were at 19 months. We will continue to be disciplined in managing our inventory.
Our condo inventory is predominantly located in our estates, Makati, BGC, Arca South, and Parklinks. We are less exposed to areas such as Manila, Q.C., and Parañaque, where there is a lot of inventory according to industry analysts. Our RFOs now comprise 10% of our stock. Moreover, RFOs located in Metro Manila comprise only 5% of our total inventory. This is much lower than the 35% reported for the industry. Our land bank utilization target is on track. We used an average of 846 hectares over the past two years. Our planned horizontal residential projects Commercial and industrial lots will be launched in available and usable lots, and we foresee that we will continue to be net users of land. We are prepared to make strategic acquisitions, especially within our flagship estates, but we are prioritizing properties that are usable in the short- term.
We started the year with a keen focus on quality. Mariana and Mike will discuss in detail how we are setting new standards of quality in our leasing and residential projects. In 2025, we look forward to the following: The continued residential launches in new areas and in new formats. We started the year 2025 with our first-ever residential horizontal project in Davao, Virendo at Toril. We will continue with our launch momentum with winner launches, another bespoke project in Makati, and our first project in Katipunan, Quezon City. Our 2025 residential launch value will be at PHP 80 billion, roughly the same as in 2024, and we intend to retain the 70/30 split between premium and core. The priming of our estates. We broke ground for the Taguig City Integrated Terminal Exchange in Arca South together with the Department of Transportation last February.
This is a key milestone in unlocking value in Arca South as a gateway from the South to Metro Manila. The revised design guidelines and development restrictions in Makati will be up for approval by the Makati Central Estate Association in the second quarter, with the end goal of spurring redevelopment in the CBD. We reorganized to focus on leisure and tourism. We formed a dedicated leisure estates team to work on the plans, activations, and development of our Lio Estate in El Nido and our Arillo Estate in Nasugbu, Batangas. We have several more leisure estates in the pipeline, which we will announce in due course. In order to strengthen the transport links to El Nido, we sold AirSWIFT to Cebu Pacific. We believe that this will open up the market for our El Nido estates, our resorts, and our locators.
In turn, we plan on expanding Lio Airport to double its passenger capacity. The continued reinvention and expansion of our leasing estates. We are about halfway done with the reinvention of our four flagship malls, and the four hotels under renovation will reopen this year. Later this year, we will start refreshing another four malls and renovating six more hotels. Lagen Resort in El Nido will reopen in the third quarter with a new positioning suited for the luxury leisure traveler. In addition to the full renovation of all rooms, it will now have a beachfront, new amenities, and additional dining destinations. We are opening our first TechnoHub offices in Nuvali and Atria Iloilo. These are our four-story buildings located within a suburban estates.
Given the high level of interest of the market, we look forward to our new TechnoHub format now in Evo City and in two more estates to be announced this year. This year, we will add a total of 128,000 sq m of leasing GLA. We are making big bets in hospitality and industrial real estate. Our plan to add another 4,000 rooms in five years is on track. This will include the expansion of our hospitality portfolio by adding new brands to serve different market segments. We target to develop over 15 green logistics parks in the next five years, all in land we already own. Four of the sites will launch this year. On these logistic parks, we will build a nationwide network of dry warehouses and cold storage facilities providing the logistic industry's real estate requirements.
This way, we can use our assets and capabilities to help improve our country's supply chain and food security. For 2025, we are looking at the following: A PHP 95 billion CapEx for the year, with 37% for residential, 25% for estate development, and 23% to be spent for our leasing and hospitality assets, a step up from the 15% allocation in 2025. Property development launches of PHP 100 billion, PHP 80 billion in residential and PHP 20 billion for our commercial and industrial lots. The opening and acquisition of over 170,000 sq m of leasing assets from our malls, offices, and logistics businesses. Finally, we aim to achieve 2x GDP growth in our bottom line. We look forward to the year and believe we are well-positioned for what lies ahead. Thank you very much
Good afternoon. Over the years, we have been asked about the size of the premium market and our ability to sustain growth. Despite challenges in the local environment, the global financial crisis, the pandemic, and geopolitical issues, wealth continues to grow, and property continues to be a safe haven to invest in. We do acknowledge that the market is more challenging. Clients become more sophisticated and discerning. They have high expectations, lower tolerances, and many choices. They purchase and invest based on confidence in the product and its unique qualities, its relevance to their lifestyles, and trust in the brand. This market will continue to spend on properties they deeply connect with. The following slides provide examples of our projects, their unique features, and why people are buying them. These are reasons to believe in our continued success.
Park Central Towers will be turned over this year, featuring 540 luxury residential apartments with over a hectare worth of indoor and outdoor amenity. These two towers shall sit above a 10,000 sq m retail plaza, featuring carefully curated F&B outlets and retailers located in a coveted address just across Ayala Triangle Gardens. Since its launch in 2016, Park Central has grown at a 10% compounded annual growth rate from its launch price of close to PHP 290,000 per square meter to around PHP 700,000 per square meter based on the pricing we are selling today. This shows the strength of our Makati projects. Our first ALP signature product will also be a pioneer project to be managed by Ayala Land Hospitality to reflect our commitment to elevating the ALP living experience. The diversity of our portfolio also allows us to serve new sources of demand.
As mentioned by our CEO, we recently launched Virendo, a highly anticipated horizontal project in Davao, with an extremely low density of only five lots per hectare. This project delivered PHP 2.7 billion in sales during its launch week. We're extremely grateful for the trust of our joint venture partners, the Floirendo family, because of the trust they have put in our capabilities and brand, entrusting to us their breathtaking property, rising almost 250 meters above sea level with spectacular views of Apo–Talomo Mountain range and the Davao Gulf. Meanwhile, demand in Nuvali continues with the recent launch of Enara, which helped generate PHP 2 billion in sales in one weekend event. Finally, we continue to elevate all of our product offerings to deliver enhanced standards of living. Our amenity strategy reflects changing consumer lifestyles, seeking convenience, healthy living, and green spaces.
Park Central Towers, for instance, has an unparalleled sky terrace amenities that are 500 sq m-700 sq m in size within an 11 m triple-height space. Each of these sky terraces will also feature a lounge or an express gym and spa. Each of these towers shall have two of these 500 sq m-700 sq m amenities in the sky. Our horizontal development, Sereneo, boasts the largest pool complex within Nuvali, while Caleia in Vermosa offers more than four hectares of contiguous park system to support a very active lifestyle. We continue to build premium communities in our master-planned estates. We do recognize that our brand is our key asset, and we are reinvesting in our brand to maintain our advantage in the premium market. We aim to achieve brand resonance as we build places that people love. Thank you.
Shifting over to the leasing and hospitality side, I guess first I'll start by saying that kind of across all of our leasing businesses, our strategy remains the same. One, bring our existing assets to full potential. Two, ensure that new builds are sufficiently differentiated to drive a premium. Three, make bold moves to build new sources of revenue. Double-clicking on Ayala Malls, we really believe that the segment is going to continue its top-line growth as we continue to optimize our existing assets and redefine retail through new malls. The reinvention progress of our flagship malls has hit between 40%-60% to date. The reopening of Ayala Center Cebu and TriNoma is likely to be in the second half of this year, while Greenbelt and Glorietta will follow in 2026.
Other than the physical reinvention works, we are also changing the merchant mix to suit the target market more appropriately to be able to improve footfall and sales. We target to refresh 30,000 sq m per year through 2028 and expect merchant optimization to lift sales per square across all malls. On top of reinventing our flagship malls, we've also allocated just under PHP 5 billion to reinvent our core malls. For these, the reinvention will commence in 2025 and reopening will be phased from 2026- 2028. We expect, again, that both combination of the physical reinvention and the merchant replacement will improve footfall and tenant sales while of course, creating an enjoyable retail experience for customers and tenants. In terms of our existing assets, operational improvements from our recalibrated leasing formula have already started to manifest through such as Manila Bay and One Ayala.
We get asked every analyst briefing. I'll share the information upfront. We're happy to report that the lease outs of Manila Bay is now at 81%, and that of One Ayala is at 90%. These two malls particularly posted more than 10 percentage point improvements in lease out, exponential foot traffic growth and 70% revenue growth as they introduce new food store concepts, experiences, and big box format department store anchors. This year we will target to open 78,000 sq m of GLA, bringing our total portfolio to 2.2 million square meters. Each mall will have a distinct personality suited to the community it caters to. We will also be introducing location-irrelevant malls, which are strategically positioned to attract people and spend from outside its catchment area.
Arca South, Greenbelt 2, Gatewalk, and Nuvali will each have their own unique personality and positioning, which we believe will be worth traveling to. A successful example would be Manila Bay, which has become an entertainment mall that's been pulling individuals around from even outside the Bay Area. Overall, we are focused on bringing our existing assets to their full potential through building and merchant reinvention while ensuring that we define the personality and target market of each of our pipeline malls to adapt to new retail demands. Thank you.
Thank you very much. With that, we open the floor to Q&A. We'll start with our live audience. Questions from the floor? If there are none, maybe we can start with a question from one of our online participants. The first question is from Ms Yvonne To from Morgan Stanley. Yvonne, you may now unmute your line.
Thank you very much for the opportunity. Can you hear me?
Loud and clear, Yvonne.
Thank you. My first question is on pre-sales. I think you were targeting 40%-50% of growth.
Mike, can you take that?
Thank you for the question, Yvonne. I think number one, looking at the sales in the market we're operating in, 12% is a very solid growth. Maybe one of the reasons why December sales were not where we expected it to be was a lot of the sales launches were backended to the last two weeks of essentially December. We should see some of these sales come in the first quarter of 2025.
If I can just add to Mike's supply side response, wherein launches were pushed back to December. Prior to the December launches, I think I launched about PHP 30 billion in December, so it was a little late to make sales during that period. On the demand side, we also saw a wait and see approach from our OFs and other nationalities, which, as you know, declined. The third quarter, we believe that the U.S. elections also created uncertainty in the market. That's why we think sales on the fourth quarter were a little bit slow.
Thank you so much. Actually, yeah, it's true. The pre-sell is very strong from that industry. That's one component. Actually, I'm really quite lucky because you were mentioning about the Overseas Filipinos or OFs. Do you happen to know why sales have been lower from them? Also on the same line of question on pre-sell if you could share what's your outlook for 2025?
If I may take that answer. I think because if you look at the composition of our OF sales, much of the sales actually coming from the U.S., that's our number 1 OF market. With the elections in the U.S. at the fourth quarter of last year, I think the changes in maybe the market sentiments that have happened as far as how interest rates will move have also affected the demand, particularly from. From that segment of the market. In 2025, as mentioned, we intend to grow the business at two times GDP, which we are forecasting to be at about 12%, and feel that our pre-sales will grow at the same rate.
Just to follow- up on that, we remain optimistic about international sales, and that's why we are increasing the sellers that we have dedicated to the international segment. Just last year, we grew our sellers by 2%, from 7,600- 7,800 sellers, as well as opening two new international offices. We opened one in L.A., which we think is a good source of international buyers, as well as the U.K. We are going to grow our international sales initiatives.
Thank you very much. My next question is on your core segment. Previously, you mentioned that lower mortgage rates should drive a pickup in demand for the core segment because most of the buyers on the core segment depends on mortgage. I think my first question is: How have mortgage rates trended in the Philippines, and are you seeing a pickup in the core segment? Because your core segment actually didn't perform as well as your premium segment. Right. Yeah.
I'm sorry. I didn't catch the latter part of your question. The first one was how have mortgage rates trended, and the second one was?
The second one is, you were expecting to see a pickup in the core segment, based on the numbers, it didn't perform as well as expectations because it didn't seem to perform as well as the premium segment.
I think we've said that we are going to lean on the premium segment for as long as interest rates remain fairly high. We have been very strategic about our launches to the core segment, because we do believe that the core segment needs to see interest rates coming down before they come back in a big way. The reason being, the core segment requires bank loans. Rates which goes to the second question, rates have remained fairly stable. We see the five-year mortgage rate. It's at 6.75%, so it's been pretty steady at that level. Where rates have gone up would be on the short end. You might recall, years back, the banks had these teaser rates. They would offer one-year rates at about 4.5%, 4.99%, and that's gone now.
Their one-year rate is at about 6%, which is a good thing because we were a little bit concerned about those teaser rates. Now, a mortgage should have to come in and borrow at about 6.5%, 6.75%, which I think is reasonable at this stage. Probably, we'd need to see it come down by maybe another 25 basis points, 50 basis points- 75 basis points to really encourage the core market to come back.
If I may add, I think in a challenging market, it's really important to understand relative performance. As our CEO mentioned, industry analysts, when they talk about the core segment, it's been down primarily 60%. If you look at our own core market that's located in these estates, it's down 6%. I think that also speaks volumes about how we're performing in this type of environment. Thank you.
Thank you very much. My next question is a little housekeeping question. On your unsold inventory levels, you mentioned 19 months. Is that right? Because the PowerPoint slide was showing 22 months.
It was 19 months at the end of November. As we announced, there was almost PHP 30 billion worth of launches the last few weeks of 2024. After that spurt of launches, it went up to 22 months. Prior to that, we were in the 19 months level.
Okay. Thank you. That's very clear. Thank you. What is your unbilled revenue level?
Which slide is it? It's come down, but I want to give you context why it's come down. It's now at about PHP 122 billion, coming from year-end 2023 of PHP 142 billion. The reason is we actually booked a lot of revenues last year. In as much as a lot of our sales came from our ready-for-occupancy units. As you know, ready-for-occupancy units, once you get to the 10% payment threshold, you're able to book 100% of those as revenues. PHP 122 billion, but we do see this continuing to pick up in the coming years as we launch new product.
Thank you. That's all from me.
Thank you, Yvonne. May I now open the floor again for questions from the live audience. Jelline Gaza from JP Morgan, then we'll have Mr. Carl Sy afterwards.
Thank you. Thank you for the presentation. I have a question on the value of the unsold inventory, just to make sure that we're on the same page. Would you be able to disclose as of end 2024, what's the total value?
It's a little above PHP 200 billion.
Thanks, Sir Toti. Would you be able to also disclose the mix between horizontal, vertical, Metro Manila, outside, as well as core versus premium?
Let me consult my notes. I wrote this down knowing you would ask it. In terms of the total by location. Let's start with premium versus core. It's about 2/3 premium, 1/3 core. Also in terms of product, same, 2/3, 1/3 vertical and horizontal. In terms of location, 55% would be in Metro Manila, 37% in Luzon, ex-Metro Manila, 7% VisMin.
Thank you, sir. Then I'd like to ask next about the malls business. Fourth quarter revenues growth was quite substantial, mid-teens, if my calculations are correct. How would you attribute that significant growth? How much would be from what you discussed, like the One Ayala and the Manila Bay? Have we started seeing better overall rental rates for those malls that are ongoing transformation?
The largest center of growth was really from the increase in rates, that was largely due to One Ayala and Manila Bay. We also saw increases in some of our newer mall contribution as well, then some of our ancillary business, specialty leasing, entertainment.
To speak, we are yet to see the fruits of the reinventions that we're doing for the bigger flagship ones.
Yes. I think we've mentioned in the past that we've faced what we call our merchant replacement program to be able to manage the impact to the overall portfolio. We've allocated about 30,000 sq m a year. While we'll reopen the physical renovations, it will be a few years until we see the full potential enjoyed. The initial indications are promising.
Thank you for sharing that. Sir Mike, I'm sure you know now what the question would be. Could you please share the updates on the pre-selling level for the two projects, Park Villas and Park East Place?
Okay. I knew also you were going to ask that. Maybe to answer that question, we have to say the uniqueness of Park Villas as an ultra-luxury project does not serve as a bellwether to measure the health of our market, the market that we're serving. We measure the health of our business primarily on the bulk of our activity in the upscale and luxury market, which is reflected in our positive results. Again, having said this, the take-up continues to be at 40%, but it's actually slightly ahead of projections based on approvals we saw. Thank you. For Park East Place, it's at 65%, up 2% from the last analyst briefing.
Thank you. That allow for others to ask questions. Thank you.
Jelline, on Park Villas, we sold one more unit from the time we spoke last November.
Mr. Carl Sy.
Good afternoon. I'd like to ask about your outlook for the residential segment, and in particular, if it has changed since the last briefing. If you could give some detail on whether there's a difference between vertical, horizontal, premium, core, that would be great.
Hello. I think we've always said that it's been a challenging market. I think we are better positioned than most other players in the market, maybe because we addressed the issues maybe a little early on compared to the others. We know we do not work in a vacuum, so we are aware of the inventory in the market. We're tracking it very closely, and we are very deliberate with our launches. Like we did last year, we will continue to lean on our premium brands. We will capitalize on our estates. We are launching more horizontal projects this year than last year, where we feel the market has remained robust and where we also feel we are very clearly differentiated. I guess to answer your question, we are very cautious going forward, but still we have quite aggressive plans in terms of our launches and our projects.
We're very deliberate. We will not launch just for the sake of launching. We will keep a close eye on our inventory levels and the use of our capital. We have a lot of projects on push button that if market turns out to be better, then we are ready to capitalize on those opportunities. If it's weaker, we will pull back, because I think at these times, it's very important for us to have a very strong control of how we use our capital.
Got it. Thank you for that. Just a simple question on the mall business this time. Whether you use same-store revenue growth or same-store sales growth, what was it in the full- year in the fourth quarter?
Year-on-year sales growth was 10%, and actually foot traffic also grew 10%.
All right. Thank you. Those are all of my questions.
Thank you, Carl. We have a few questions on the chat box. Let's start with one question on residential coming from Mr. Rob Skipper from Ashmore. His question is, please can you talk about the decline in pre-sales performance in Q4 2024, which was already discussed earlier. His other question is, if the issue with pre-sales was December launches, how has the performance been in 1 Q 2025?
I'll start off with saying that it looks promising given the numbers we saw for two of our projects, Enara plus Virendo, PHP 4.7 billion worth in a weekend. Looks promising. Mike, what's your sense?
Yeah, no. Exactly. We remain positive about performance for the first two months. The launching in December was really critical to ensure that we have much needed inventory for Q1. Thank you.
Thank you for that. Another question on residential coming from Ms. Joanne Lorraine Asprer. Given the oversupply of residential properties in the NCR and the growth of emerging cities across Luzon, Visayas, and Mindanao, is there a sufficient pool of potential buyers in these developing areas? Additionally, do local buyers have the financial capacity to sustain demand for residential properties in these markets, given that Ayala properties are sold at a premium?
Well, I just wanted to go back to where we said our inventory was, which is mostly in Luzon. As some of you may know, these are regions just north or just south of Metro Manila, which means we really still capture a big portion of our buyers are still from Metro Manila where we believe bulk of the economic activity of the country remains. We're quite bullish about our buyers for our ex-Metro Manila projects.
Thank you for that, Ms. Meean. We have one question coming from the online audience. May I call Mr. Elle Jamil of ATR Asset Management. Elle, can you turn on your mic?
Hi. Hello. Good afternoon.
We can hear you, Elle.
Hello. Hello. Can you hear me?
Loud and clear.
Okay. Yeah. This is a quick question. I'm sorry if I missed it. What portion of your inventories are RFO? Can you give a breakdown, please? Geographically, segment-wise, and type of product.
I was expecting that question from Jelline. Yes, I have the breakdown. The industry report says that there are 74,000 RFO units Metro Manila equivalent to what they said was 98 months inventory. Of the 74,000 units, 26,000 of those units are RFO. Okay. This is our RFO total. In terms of units, if the industry has 26,000, we have 1,303 units, so that's 5% of the RFO in the market. We also take comfort in the fact that our RFO are in prime areas. These are in the main cities. In terms of units, for example Makati only 120, BGC only 104. I think in terms of RFO, we're in a good spot. We're not particularly worried about our RFO situation, which is about 10% of our total inventory.
Thanks a lot. I would also like to ask about any updates in the developments in Arca South. Maybe just a related question also. For a particular mall South Park Mall, what is the vacancy rate there in that mall? Noticeably it's quite vacant. What is the plan there?
We're getting the info on the occupancy of South Park Mall. A good development there is that STI broke ground and they are intending to build a facility or a school that they're targeting to have about 10,000 students. That would be a very good addition for our South Park development. Occupancies.
We'll get the number, Elle.
Arca South, we broke ground for the TCITX, which is an intermodal terminal. This is where all the provincial buses from the south will come in, and passengers will then transfer to either a city bus or the North-South Commuter Rail or the future subway in Metro Manila. This will actually be a bus and a rail and a subway interconnected terminal. We are also advancing in the implementation of SEMME or the Skyway Stage 3. Am I correct? SEMME, S-E-M-M-E, which will connect the Skyway with C5. Meanwhile, we will be completing our mall. We've put that on hold since the pandemic. If you go there now, you will see that we are completing the projects and our first phase of the mall will open by end of this year, second phase by next year. South Park, 80% occupancy.
80% occupancy.
80%, yes.
Yes. Probably my last question. Can you give us some color on the commercial and lot sales you guys had in the past year geographically, which projects and estates? If you can also give us the profile of the buyers, if you can. Thank you.
I'll let our Head of Estates answer that question. Chris Maglanoc.
The estates where we had the most interest in were Nuvali. We also had Arca South and Broadfield. Those were the three in Luzon. For Visayas and Mindanao, there's a lot of interest in Azuela and our project in South Coast City. Those five estates accounted for a sizable portion of our commercial lot sales. In terms of the buyer, some of them were repeat buyers, but we were also able to engage with new buyers. Some of these are really big-ticket items. We're talking of in the vicinity of PHP 1 billion each. There's a very limited pool for this type of buyer. We were banking on our extensive network of existing buyers.
The buyers for commercial lots are really local entrepreneurs, some of whom have plans to put up their own businesses or their own offices or hotels even in our developments. Some of them are investors, so they're holding on for future land value appreciation. Perhaps one thing to note about our commercial and industrial lots is we're also differentiating, offering more varied products. We have shop houses, which are lower-ticket lots, about PHP 50 million-PHP 100 million. We also have, as part of our leisure estates, commercial lots effectively, but for more of our tourism or leisure use, like where our buyers can put up Airbnb type facilities or hotels. That's a segment of the market, again, which we foresee significant growth. In 2024, our commercial and industrial lot sales grew by 47%. Am I correct? 47%.
54%.
About 50%. 52%. We're actually seeing quite a big jump in sales in that segment.
Thank you, Elle. The next question will come from Mr. Gilbert Lopez of Macquarie. Gilbert, you can unmute your mic.
I wanted to ask, it was quite timely that Meean mentioned commercial and industrial. Would this continue to be a driver for 2025? To what extent? If you could give us even more granularity behind this for 2025.
Yes, we're quite bullish about the commercial lot sales. These are all inside our estates. I suppose with the performance of our estates, buyers also want to have an opportunity to take part in the upside by holding land, not just residential units where they can, like in BGC, put up their own buildings or even their own apartments, their own hotels. The main, I suppose in terms of value they remain in our estates in Makati, such as Arca South in Taguig. I think we'll have an offering in Circuit. Where else, Chris? In Cebu, we'll have some opportunities as well. Our shop houses in Tarlac, in Bulacan, in Lipa, in Cavite. There are different formats. We'll continue to have commercial lots in Lio as well. That's another estate where we find our buyers would like to be part of.
That's one side. The other side are our industrial estates. As you know, manufacturing and warehousing continues to grow in the Philippines. Our industrial parks in Pampanga, in Naic, Cavite, and in Batangas, in Laguindingan are also very popular with our buyers.
Fortunately, we have the land to be able to unlock these horizontal developments, both residential horizontal and commercial and industrial lots. That's why we did, for the first time, show you a slide on property development sales, because we think commercial and industrial lots will continue to play an important role in the growth of our business.
Thank you so much.
We just have a few questions on the chat box. Coming from Mr. Sean Zhuang from APG Asset Management. On residential, how do you see the price gap between primary and secondary market? What discount are we seeing in the market for Metro Manila versus provincial? What is our pricing strategy? Another question from him. Please elaborate on the increase in pipeline for malls and hotels.
On the pricing strategy, it's hard to answer it in general for Metro Manila, because as mentioned, there are areas where demand is higher. Definitely in Makati and BGC and Taguig in Arca South, prices have held, and we are able to escalate prices. There are differences, clearly, between prices in the primary units versus the secondary market prices. I think most of the buyers will just understand this from a cash point of view, present value point of view, because if you do buy in the secondary, you'll either need to go to the bank and get a loan or pay in cash. Property prices in the South, Nuvali area, the Arca area continue to be strong. We've been able to escalate pricing anywhere between 5%-7%, and we believe we're still positive about the potential for these areas. Thank you.
Maybe on the malls and hotels pipeline. I think we shared earlier that we have about 700,000 sq m for the malls that's under different stages of either construction or planning. This year, we're going to be opening quite a bit of GLA in the south across Vermosa, Evo City, and also in Nuvali. We're also opening some GLA in Park Triangle, which is in BGC as well as our CEO mentioned, Arca South Mall. For next year, we're going to be opening GLA in Parklinks. We have an expansion in Trinoma as well as more GLA across Evo City and Nuvali, and then the second phase of Arca, as well as the much-anticipated mall in Mandaue as well. Really, you'll see that across both of our malls and our hotels, we're really doubling down on our estates. We're really excited about the potential.
For our hotels specifically, we have also much anticipated the opening of Mandarin. It's about 280 rooms here in Makati, as well as another Makati hotel closer to the Glorietta, Ayala area. We also have rooms planned across Makati in Lio Beach as well and also in Cebu. Does that answer your question?
Yes. Thank you, Mariana. We have two more questions on the financials and CapEx. This is coming from Mr. James Kenneth Gudito. The question is. How does Ayala Land plan to finance its target CapEx of PHP 95 billion? Specifically, what portion will be funded through debt capital, issuance of bilateral loans, and other financial sources? Do we already have a target for these fundraising activities? Related to that, also asked by Ditas Lopez. Ayala Land plans to raise as much as PHP 75 billion via the capital market this year based on the company's disclosure. Will you be tapping the international market or will the entire amount be raised locally? How much will be in bonds?
I'll answer the last question first. The fundraising will all be domestic PHP. The PHP 75 billion, PHP 25 billion of that is earmarked for refinancing. We have maturities of PHP 25 billion. The balance of the PHP 50 billion is, right now, it's probably on the high side. We think we'll be borrowing much less than that. Most likely, we'll go to the market for PHP 30 billion. Of which half, similar to how we do it before, half will go to bank financing, and the other half we will tap the capital markets. I think PHP 25 for refinancing, that's going to happen, and then maybe another PHP 30 billion to fund the new CapEx.
Thank you for that. I think we are actually 15 minutes past our schedule. If there are any further questions, please send us an email at investorrelations@ayalaland.com.ph. Thank you very much for the participation, and merienda is served at the back. Thank you, everyone.