Eton sees income by next year

Publicly-listed Eton Properties Philippines Inc. (EPPI), the real estate arm of the Lucio Tan Group, expects to start realizing a positive bottom line beginning 2009 with several of its projects to start construction this year.

EPPI president Danilo Ignacio explained that the 10-month old company, which has launched 10 projects so far, has been losing money in its books because it has not began construction of any of its projects launched only late last year.

“Eton has zero realized revenue because we only realize revenues when we start construction. Even if we pre-sell everything but no construction has commenced, we will show a loss because revenues are realized as a percentage of completion of projects. But next year, that is when we start recognizing lots of revenues because most of the construction will then be in full swing. By next year, we will be posting a net income,” he pointed out.

EPPI launched yesterday its most ambitious project to date, South Lake Village at the 1,000-hectare integrated mixed-use township development Eton City in Sta. Rosa, Laguna. Considered EPPI’s flagship horizontal project, South Lake is a masterplanned development covering about 150 hectares and is the first residential island lot concept in the Philippines.

South Lake Village will have 18 residential islands surrounded by a 35-hectare man-made lake. Each island, approximately one hectare in size, will have eight to 12 residential lots of about 1,000 square meters each.

Ignacio said South Lake Village is inspired by similarly themed development around the world, including Foster City in San Francisco, Dubai’s Jumeirah, The Palm and The World, and Riversong in Shanghai. These developments are often referred to as among the eighth modern wonders of the world and feature mixed-use communities surrounded by bodies of water.

Sta. Rosa, viewed by major property developers as the next growth area, is a prime center of business, commerce, and industry not only in Laguna but also in the whole Southern Luzon region.

EPPI is a prestige property development company specializing in high-end and mid-income luxury residences, state-of-the-art IT and BPO office developments, and township projects.

EPPI earlier announced it is spending P10 billion over the next five years to fund seven priority development projects in key cities in Metro Manila and in southern Philippines.

Ignacio said the required capital would be raised from additional equity infusion and sale of shares. But he said the developments at Eton City, which is EPPI’s ninth project, are not included in the P10-billion capex. EPPI, listed at Philippine Stock Exchange, is a consequence of Balabac Resources and Holdings Corp. that changed its primary purpose from a holding company to a purely property development firm.

Ignacio said the impressive success of EPPI is largely due to the huge land bank of the Lucio Tan Group, including land assets of Philippine National Bank, Allied Bank and Philippine Airlines.

Earlier, Tan himself said that while EPPI’s entry into property development may be considered by many as late, “we are just right on time.”

“We are now on a real estate boom which many believe will be longer-lasting than the one we enjoyed in the nineties. There are many development that are helping the current boom which were not present before. Remittances from our overseas workers now average $1 billion per month and most of these are being used to buy houses and condominiums. The enactment of the dual citizenship law in the US also encouraged Filipino immigrants to buy properties here as vacation and retirement havens,” he emphasized.

Tan likewise cited the increased tourist arrival, the rise of business process outsourcing, and the enactment of the special purpose vehicle law as among the factors that are supporting the growing business optimism that real property will drive the country’s economy in the next five to 10 years.

The company’s development is divided into four major sections. These are South Lake City, another high-end residential village, a central business district and a golf village. The CBD will host a resort hotel, a BPO center, retail and commercial centers and a mall, condominiums and medium-rise buildings.

Ignacio expects the South Lake Village to be ready for turnover by June next year.

EPPI’s top executive likewise expressed his bullishness in the local real estate market, as he revealed that the company has many other projects in the pipeline. “We are confident that this year will be a very good year for us.”

Eton City’s launch will be followed by a medium-rise building project in Quezon City to be launched this month, and another by the second quarter this year. Next year, EPPI will begin construction of a huge project at the corner of Quezon Ave. and EDSA.