The P24.3-billion bid of Ayala Land Inc. for a 74-hectare property in Taguig City was more than just a hot topic for the business community to talk about. It was the biggest government privatization effort in years and a tremendous boost to the Aquino administration’s efforts to entice investors.
The government was willing to let go of the land of the state-owned Food Terminal Inc. (FTI) for P10.2 billion, thus raising questions as to why the Zobel family’s Ayala Land bid that much. Some market analysts were baffled, considering that the second-highest bid was P14.7 billion, submitted by taipan John Gokongwei’s Robinsons Land Corp. The third bidder was tycoon Andrew Tan’s Empire East Land, which offered P11.2 billion.
What made matters more complex was the fact that some prospective buyers had written the government privatization agency a few days before the Aug. 14 bidding to seek more time to study the implications of two issues believed crucial in pricing the property correctly. These were the existing leaseholds (some parts of the property are tenanted) and the lack of clear access to and from major roads like C5 and the South Luzon Expressway. Thus, from an original seven prospective bidders (the others being taipan Henry Sy’s SM Land Inc., the Gotianuns’ Filinvest Land, the Lopezes’ Rockwell Land Corp., and the Antonios’ Century Properties Group), only three submitted proposals.
In defending its bid, Ayala Land said it was a “fair” and “reasonable” price “reflective of the company’s overall vision for the property to become the ‘southern gateway’ to Metro Manila.”
“We are confident that the price is rational, reasonable and reflects the potential of the property,” Jaime Ysmael, Ayala Land chief financial officer, said in a TV interview a day after the bidding. With the P24.3-billion bid, the FTI property is equivalent to about P32,800 a square meter, which, Ayala Land argued, was a “significant discount” to land values in nearby Makati City and Bonifacio Global City.
On the matter of accessibility, Ysmael said that this had always been an issue in the past and that based on Ayala Land’s familiarity with the property, having been involved in the previous bidding, as well as its understanding of the projects of the government, “there is definitely a plan to provide access to C5 via FTI and the connection to SLEx that will make the property accessible.”
As for the outstanding leases, 50 hectares, or more than half of the property, is free and clear, and the existing leases will expire in a couple of years, such that “by the time we finish planning, 90 percent of the entire property can be developed immediately,” he said.
Once developed into a business district, the FTI property will very likely complement other Ayala developments in Makati, BGC and Quezon City. The development is also expected to spur urban renewal in the area and trigger increased economic activity in Taguig. Another beneficiary of the FTI privatization will be the agriculture sector as 60 percent of the proceeds from the sale has been earmarked for the Comprehensive Agrarian Reform Program and the remaining 40 percent for the Department of Agriculture.
The Zobel family has been among the most bullish vis-à-vis President Aquino’s administration. One proof is that Ayala Land, its property arm, now has numerous projects on its plate. Among these are the P30-billion One Bonifacio High Street in BGC; the P65-billion Vertis North, the future central business district in Quezon City; the huge Nuvali joint venture with the Yulo family; and the joint venture with the University of the Philippines, the Technohub on Commonwealth Avenue. Ayala Land is also working on a deal to acquire OCLP Holdings, the property firm of the landed Ortigas family. Outside the metropolis, the Ayala group is also involved in development projects in Pampanga, Subic, Cagayan de Oro, Iloilo, Cebu and Palawan.
At the end of the day, Ayala Land’s move is a strong vote of confidence in the Aquino administration. The previous administration had tried several times to sell the FTI property, but no serious bid was offered. The business climate seems to be really changing for the better since the elections in 2010. Now, if the other big companies can be as optimistic as the Ayala group—and given the slew of positive developments under the present dispensation—perhaps the Philippines will truly shine in the global economic arena.