Property developers are learning they can’t rely on home sales alone

Property development has traditionally been driven by the sale of homes, condominiums and commercial spaces. But selling a property is different from owning one that generates income over several years. As the Philippine real estate market faces weaker residential demand, the value of having both sources of revenue is becoming more apparent.

Malls, office buildings, hotels and industrial facilities give developers another way to earn from their properties. Rental payments and operating income can provide a more regular flow of earnings, while residential projects generally generate revenue when units are sold.

Having a substantial portfolio of income-generating assets can therefore help cushion a property company when homebuyers become more cautious.

Ayala Land Inc.’s first nine months of 2026 offer a glimpse of how this business model can work. While its property development revenue fell 24% to ₱57.6 billion, revenue from leasing and hospitality grew 11% to ₱37.8 billion, excluding the previous year’s sale of Alabang Town Center for a more comparable year-on-year figure.

The difference was even more visible in the company’s earnings contribution. Leasing and hospitality accounted for 55% of Ayala Land’s earnings before interest, taxes, depreciation and amortization (EBITDA), while property development contributed 45%. Leasing and hospitality also accounted for 36% of total revenue, up from 29% a year earlier.

This comes as the company’s residential business faces a tougher market, with Ayala Land reporting during a recent media briefing that its reservation sales dropped 25% to ₱77.7 billion in the January-to-September period, while residential revenue declined 24% to ₱48.2 billion.

The results help explain why developers with established commercial and hospitality portfolios have another source of earnings when home sales slow. Their malls, offices and hotels continue to generate income from tenants and guests even as residential sales face pressure. Companies that depend more heavily on selling properties have fewer recurring sources to draw from during a downturn.

Ayala Land’s capital spending also points to the growing importance of these businesses. Leasing and hospitality accounted for 36% of its ₱53.1 billion in capital expenditures through September, compared with 32% for residential projects. A year earlier, leasing accounted for 28% of capital spending.

Residential development remains a major part of the property business, and a recovery in buyer demand would benefit developers. But Ayala Land’s results show why owning income-generating properties can be just as important as having homes to sell. For property companies, the business increasingly involves earning from what they build long after the construction is finished.