Injap disrupts leasing industry

In October 2017, BizNewsAsia weekly business magazine predicted that Edgar “Injap” Sia II’s DoubleDragon Properties Corp. would be the Philippines’ next corporate giant.

The business weekly based anchored its prediction on DD’s track record. In 2017, it became the Philippines’ fastest growing property company—in revenues, profits, and acquisitions. In 2014, when DD went public the P1,000 invested in the company ballooned 15-fold to P15,000, by Injap’s own reckoning. A 1,400 percent increase in share price, from P2 a share to P30, in four years, is equivalent to a 350 per year average gain in share price. Not bad for a company that in 2017 was barely seven years old.

DD’s market capitalization, or its stock market value, was, for a while, higher than its much larger and older rivals. In March 2017, with a market cap of P120.6 billion, DD was more valuable than Robinsons Land (P94.9 billion), and Megaworld (P109.29 billion).

In the past three years, DD’s revenues have risen on the average, by 61 percent per year, to P6.61 billion in 2017. Profits have surged, by 73 percent yearly average, to P2.52 billion in 2017.

By 2016, Injap had become the Philippines’ youngest dollar billionaire, with net worth of $1 billion. However, following a recent correction in DD’s share price, Injap’s 37 percent in DD is now worth only $475 million, a 46.6 percent decline. The belated, if not much needed share price drop after a frenetic and fantastic rise, while seemingly precipitous, is the potential upside for DD’s investors. In stock market parlance, it is a “correction”, creating a momentum for a sudden surge.

This April, DD is raising P6.75 billion in equity funding by selling 135 million new common shares. The P6.615 billion net proceeds from the IPO will fund 1) the expansion of its leasing and hotel business; leasable space has been increased 20 percent from one million square meters to 1.2 million by 2020; and 2) land acquisitions for future growth.

This year, with the peso cheap because of the rising dollar, foreign investors are expected to overwhelm local investors in bidding for DD’s new common shares. Foreign players were left out during the 2014 IPO, they having underestimated DD’s market potential.

DD has recently repurposed its business model. Its two main businesses will now be leasing and hotels.

Leasing will be of three kinds—retail space, office space, and industrial factory, warehousing and logistics space.

With the Philippines now the fastest-growing economy in Asia, outside China, and the Filipino now veritably middle class, all three sectors are booming. “The leasing business has a very high profit margin,” gushes Injap Sia, chair and CEO of DoubleDragon Properties Corp. Compared with selling real estate, leasing has two big advantages: one, you build a recurring income, from rentals, that is pegged to inflation; and two, you get to keep the property which invariably appreciates in price or value. Either way, leasing wins.

DD’s retail space leasing has one remarkable push factor. Filipino consumers in big cities and urban areas like Metro Manila and Cebu may be getting tired of visiting big or massive malls, huge mountains of concrete and sprawling car parks that can be oppressive and unmanageable with horrendous traffic and hordes of shoppers. What do these shoppers do instead? Instead of visiting brick and mortar shops in malls, they go wireless, cashless, and carless. They go online or mobile with their cellular phones to shop. “Shoppers will still visit big malls,” notes Injap, “but not to shop.”

Consider this: Only one of every 20 Filipinos have a credit card, a 5 percent penetration rate. But four out of every 10 Filipinos have a Facebook account, a 40 percent penetration rate. What do you do then? Shop with your mobile phone, or Facebook. People now buy and sell online. It’s called e-Commerce. And companies like Amazon and Alibaba have joined into the bandwagon to become behemoths of retailing.

What does Injap do then? His DD will concentrate on what he calls Tier2 to Tier 3 communities—cities and communities outside the big metropolises, small yet big enough for a retailer to have scale.

DD’s CityMalls are designed and customized precisely to meet that market segment Injap is building 100 CityMalls by 2020. So far, this 2018 alone, he has started up 28 malls and is completing another 22 to reach his target of 50 malls by yearend. He will build 25 CityMalls in 2019, and 25 more in 2020 to reach his century target. CityMalls have 95.3 percent of space leased out, meaning, there is little, if any more, space to rent.

DD’s entry into leasing of factory, warehouse, and logistics space is also in reaction to the rise of e-Commerce. “You need warehouse space and logistics operation to deliver the goods bought online,” explains Injap. DD already is building eight CentralHubs with total leasable spae of 100,000. Two hubs, in Tarlac and Iloilo, will have 54,000 sqm of leasable industrial space.

At the same time, DD promises to be one of the country’s biggest hotel operators with as many as 5,000 hotel rooms by 2020. With 844 rooms, hotel occupancy averaged 74.8 percent in 2017.

DD began originally as Injap Land Corp. of Injap Sia on Dec. 9, 2009 engaged primarily in real estate development. In November 2010, it began commercial operations.

In June 2012, ILC changed its name to DoubleDragon Properties Corp. as it became a joint venture between Injap and the family of Tony Tan Caktiong of Jollibee Foods Corp., who owns 37 percent, thru the fastfood king’s Honeystar Holdings Corp. The remaining 26 percent is owned by the public.

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Topics: Edgar “Injap” Sia II , DoubleDragon Properties Corp , Honeystar Holdings Corp , Tony Tan Caktiong ,
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