Asia’s property pioneers: Monetizing dreams
Despite the vast sums required to develop edge cities and super blocks, including investment for the necessary macro infrastructure, large developers seem to have little difficulty in raising the necessary capital. As bank funding for large property projects dried up following the Asian financial crisis, developers learned to become adept at self-funding.
“To a large extent it was easy,” says Gordon Benton, senior executive and urban planner for Lippo Karawaci. “We sold 60% of our properties for hard cash before we built. But we also had to come up with extra funds. A lot of that came due to the Lippo name.”
Funding developments through pre-sales, principally of residential units, remains a favoured tactic of large developers. Ayala Land, which is undertaking a major new business and community development in Canlubang in Laguna, south of Manila, is confident it can self-fund almost the entire project.
“It’ll be a phased, horizontal development,” says Jaime Ysmael, senior vice-president and chief finance officer of Ayala Land. “We’re able to pre-sell lots and condominiums with very little borrowing required.”
Land acquisition cost is also a critical factor in the equation that makes for profitable large-scale developments.