Luxury and countryside spaces charm developers

Top property firms look to luxury and countryside developments, as they face challenges in traditional growth drivers for the sector.

Real estate developers face no shortage of challenges. They contend with a supply glut in Metro Manila’s condominium market and muted demand for low- to mid-income housing. These stem from elevated mortgage rates and a bevy of projects in mass-market areas such as Quezon and Caloocan cities.

Market leaders such as Ayala Land Inc. and SM Prime Holdings Inc. are recalibrating their strategies.

Ayala Land

• The company  has cited plans to expand outside Metro Manila, particularly in provinces south of the capital region, where demand continues to grow.
• It’s leading in terms of sales take-up growth for upscale properties, allowing it to maintain robust earnings despite headwinds in other real-estate segments.

SM Prime

• The company has shown interest in expanding into locations such as Cebu, La Union, and Ilocos Norte.
• It’s also venturing into the luxury segment, highlighting a broader strategy shift toward diversification.

Still, the entry of more competitors into the upscale market will heighten pressure.

On balance, a more accommodative interest-rate environment is expected to result in lower mortgage rates. That should drive demand across segments.

For now, it is prudent to maintain a cautious outlook, as investors remain wary of the current market dynamics. Considering these factors, the team adopts a neutral stance, with a preference for Ayala Land.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)

GINNY PECAÑA is the Head of Investment Services Division at Metrobank’s Trust Banking Group, overseeing markets and equities research, investment analysis, fund selection, portfolio analytics, and trade execution. Ginny has garnered multiple awards for fund management with her decades of banking experience. She holds a Bachelor’s degree in Business Management from the Ateneo de Manila University as well as various finance certifications. On weekends, Ginny plays Mom to two teenage boys and a corgi named Hobie.

GERMAN DE LA PAZ III, CFA serves as an Equity Research Lead at Metrobank’s Trust Banking Group. His coverage includes gaming, telcos, conglomerates, and utilities, as well as select offshore markets. German holds a Bachelor’s degree in Humanities and a master’s degree in Industrial Economics from the University of Asia and the Pacific. Recently, he obtained his CFA charter and is currently pursuing additional industry certifications. In his free time, German enjoys playing sports, particularly basketball, and has a penchant for reading fiction books.

ARIZ MARCELINO is an Equity Research Analyst at Metrobank’s Trust Banking Group. Locally, he covers the banking, consumer, and property sectors. He also tracks offshore markets and global investment themes to support asset allocation strategies. Ariz graduated from New Era University with a degree in Banking and Finance and has passed the CFA Level 1 exam. Outside of work, he unwinds by watching popular sitcoms and anime series while enjoying a cup of hot matcha latte.

CHARLES RANDY LUMHOD is a Management Trainee, assigned to the Equities Research Team of Metrobank’s Trust Banking Group. He provides analytical support for range of sectors and themes, with coverage focusing on shipping and off-index names. He holds a Bachelor’s degree, cum laude, in Business Administration major in Financial Management from the University of Santo Tomas. Outside work, he stays active by going to the gym and often unwinds at cafés.