This comes amid expectations of a prolonged slump in the mid-market housing sector in Metro Manila, mainly due to an oversupply that could persist for several years.
Targeting the housing backlog
Saavedra believes they can weather the downturn by doubling down on affordable homes priced at P3.5 million or less, which remain unaffected by the glut.
“There’s some softness [in demand] for housing above P5-6 million,” the founder, chairman and CEO of listed Megawide Construction Corp. told reporters in a recent interview. “There’s still an oversupply.”
He said Megawide, which is involved in construction, infrastructure, and real estate through PH1 World Developers, has a relatively diversified construction portfolio.
“It’s about 20 percent [exposure in the mid-market]. It’s not large,” he said.
“In our own developments, we will be focused on [more affordable] developments. That’s where the real backlog is, when you go below P2.5 million,” he added.
Infrastructure
Megawide, known for developing airports like the Mactan Cebu International Airport and Clark International Airport, is also eager to take part in more public construction deals.
But he noted their involvement will depend on the timing of government auctions, which is beyond their control.
Megawide will also complement its Paranaque Integrated Terminal Exchange with a new project, the P1.87 billion Cavite Bus Rapid Transit.
Megawide clarified on Monday the Cavite BRT will have 42 stations spread across a 29-kilometer stretch.
The concession period will run for 30 years.
Right-of-way issues delay Metro Manila subway
Megawide is part of a Japanese venture comprised of Tokyu Construction and Tobishima Corp. to build a portion of the Manila subway project.
“We’ve started but it’s not yet in full swing,” he said, adding it was difficult to ramp up since certain areas were facing the typical right-of-way problems encountered by the government for large infrastructure deals.
This is hindering access to certain proposed stations, preventing the tunnel boring machine from being lowered.
Megawide targets growth in 2025
Despite those challenges, Saavedra expects better earnings this year, led by their property development and construction sectors.
For the full year, he projects revenues to grow by 20-30 percent, with net income expected to finish at an even higher margin than top-line growth.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.