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Eye on Earnings: Softer outlook for Philippine builders
Philippine property developers saw stable full-year earnings in 2025, but the setup ahead is softer. Learn more about the challenges the sector faces.
By Charles Randy Lumhod
Philippine property developers’ earnings were resilient last year, but mounting risks dampen its outlook for 2026.
The sector delivered stable full-year earnings in 2025, supported by companies’ leasing businesses. Malls were supported by healthy foot traffic, higher occupancy, and firm tenant sales. Hotels gained from domestic tourism amid weaker international arrivals.
Offices were stable despite an industry vacancy rate of about 19%, according to real estate services company Colliers International Philippines Inc. Major developers reported steady workspace take-up and no clear slowdown due to artificial intelligence.
Earnings Review
| | Full-Year 2025 (In PHP Billions) | Year-on-Year Change | 4Q earnings (In PHP Billions) | Year-on-Year Change | Against Consensus |
|---|---|---|---|---|---|
| Ayala Land Inc. | 30.5 | 8.0% | 9.2 | 30.0% | Ahead |
| SM Prime Holdings Inc. | 48.8 | 7.0% | 11.6 | -1.0% | In-line |
| Robinsons Land Corp. | 13.5 | 9.0% | 3.3 | 8.0% | In-line |
| Megaworld Corp. | 20.9 | 4.0% | 4.9 | -19.0% | In-line |
| TOTAL | 113.7 | 7.0% | 29.0 | 4.0% |
Source: Company Disclosures, Bloomberg
Meanwhile, revenue from residential development fell. Ayala Land saw softer demand from luxury homes, while SM Prime faced elevated cancellations as pre-sales made before stricter 2024 standards flowed through the quarter.
Even before the recent geopolitical conflict in the Middle East, Philippine developers expected their residential segment to stay soft amid weak domestic consumer sentiment. Possible quickening inflation could further delay big-ticket condominium purchases and keep inventory in Metro Manila elevated.
A sector already facing headwinds enters the second quarter of 2026 with more challenges. Malls may see softer foot traffic, as consumers adjust spending amid higher oil prices. Tourism could slow for the same reason. Offices should be relatively more resilient, but growth may be deferred as companies hesitate to add headcount.
Residential sentiment may weaken further if interest rates rise. Thus, a shift to a neutral call across all developer names is prudent, with undemanding valuations providing strong downside support while the market awaits clearer catalysts.
Express this view through Metrobank Trust’s Metro Philippine Equity Index Tracker Fund, a Unit Investment Trust Fund (UITF) that aims to track the Philippine Stock Exchange Index and captures select names discussed here, including Ayala Land, Inc. (ALI) and SM Prime Holdings, Inc. (SMPH).
(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.)
(UITF Disclaimer: Trust Participation is not a deposit and not covered by PDIC. Any income or loss is for the account of the Trustor. The bank is not liable for losses unless proven to be grossly negligent. The Declaration of Trust of the Fund is available at the principal office of the Trustee upon request.)
CHARLES RANDY LUMHOD is an Equity Research Analyst of Metrobank’s Trust Banking Group. His coverage includes shipping, properties, REITS, and consumers, as well as select offshore markets. 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 running and going to the gym.