Message from the Chairman

Andrew Tan

Today, Megaworld is recognized as one of the largest residential developers in the Philippines. As a company, we continue to help boost the IT-BPO industry as the country's brightest pillar of growth.

At the same time, we continue to serve as the biggest landlord of the office space this business requires. There are now 22 townships and integrated lifestyle communities in our roster, and we are constantly reinventing the way of life in the most strategic locations. All these are a testament of our commitment to continue building up the Megaworld story, and strengthening our brand in the years to come.


On the residential front

Megaworld’s real estate sales reached P27.5 billion last year. This is undoubtedly a high base and we were able to push it even further by tapping into other emerging markets in the country. Our residential offerings in our various townships such as Twin Lakes, Southwoods City, Iloilo Business Park and Davao Park District have been contributing more and more to our mix with every passing year. While our sales is and will be anchored in Metro Manila, we are dedicated to creating a diversified portfolio that will support the continued growth of our residential arm in the future.

Rental income propelled our revenues in 2016, growing 15% during the year, and ultimately reaching P10 billion for the first time. It is a significant milestone in our pursuit to make Megaworld an even stronger company. We also marked another important milestone on this side of the business when we breached 1 million square meters of leasable space in our office and commercial developments. Moving forward, our goal for rentals is to hit P20 billion in 2020, when we will have surpassed 2 million square meters in total leasable space. This means a doubling of rental income and space in just 4 years.


Leveraging on opportunities

Our hotel business grew dramatically in 2016, exceeding the P1-billion mark in revenues—a landmark achievement. It was the fastest growing segment, expanding 46% to reach P1.2 billion by the end of the year. In terms of launches, we unveiled the Belmont Hotel in Newport City and Richmonde Iloilo in Iloilo Business Park last year. We are excited to ramp up our hotel developments, mainly under our homegrown hotel brands Belmont and Savoy.

Megaworld practiced excellent cost management last year, which eventually translated to a boost in our net income in 2016. Our operating expenses were efficiently kept to a minimum, growing only 4.5% during the year. Total costs and expenses also grew modestly at 2% last year, which led to a 12% improvement in our net income that reached P11.6 billion in 2016.


Geographic expansion

Our large-scale developments were at the heart of our accomplishments in 2016. We launched a live-workplay township called Maple Grove, a 140-hectare property in General Trias, Cavite, which we first announced in May last year. Maple Grove showcases the same lifestyle components that have become synonymous with the Megaworld township, but it will be particularly geared toward sustainability and environmental responsibility. We also launched another large-scale development in a new category, Eastland Heights in Antipolo, Rizal, through our subsidiary Global-Estate Resorts, Inc. Eastland Heights is our first “integrated lifestyle community” which focuses on residential and leisure components. Our diversification story is truly coming to life—we now have 22 townships and integrated lifestyle communities all over the Philippines: four in Fort Bonifacio, six in Metro Manila excluding Fort Bonifacio, five in Luzon excluding Metro Manila, six in Visayas, and one in Mindanao.


Upholding our vision

Looking at the bigger picture, we can see that Megaworld is in a prime position for growth in the years to come. First, the Philippines is in the league of fastergrowing economies like China and India, having grown its GDP in the 6-7% range in 2016. Forecasts point to our country sustaining this kind of growth moving forward because of our strong fundamentals as a nation. Second, our government is pushing hard to roll out and complete more infrastructure projects, leading the country to its anticipated infrastructure renaissance a few years down the line. From an average spending of around 3% of GDP in the last 5 years, our government will set aside as much as 7% of GDP for this year until 2022. These things will greatly impact Megaworld’s growth in the future because we have over 3,000 hectares of developable land across Luzon, Visayas, and Mindanao. The story of our diversification ties perfectly into this infrastructure program. Megaworld has access to the areas that will benefit and be modernized by such infrastructure.


The theme of our annual report this year alludes to a story of endurance and longevity. I would like to finish my message by looking back at our history. I founded our company 27 years ago. We had humble beginnings, building pocket developments before we even broke ground for our first township. We were the first to push for the presence of the IT-BPO industry in Eastwood City. We were also the first to create a township concept that has since become the benchmark for large-scale development in the country.


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