Megaworld’s modest growth and lighter debt load contrasted with Ayala Land’s revenue decline and greater reliance on borrowing.
The first half of 2026 divided two of the country’s biggest property developers along an increasingly important fault line: the ability to convert a sprawling real-estate portfolio into growth without adding financial strain.
Ayala Land Inc. remained the larger company by nearly every measure. Its first-half revenue of ₱74.98 billion was roughly 70% higher than Megaworld Corp.’s ₱44.20 billion, while its asset base of more than ₱1 trillion was about twice the size of its rival’s.
But size wasn’t the advantage it once appeared to be.
Ayala Land’s revenue fell 9.7% from a year earlier as property-development income weakened, while Megaworld’s revenue increased 2.6%, helped by rising contributions from offices, malls and hotels. Net income at Ayala Land declined 15.1% to ₱14.57 billion. Megaworld’s net income rose 5% to ₱12.70 billion.
The result was an unusually narrow earnings gap between companies of markedly different scale. Profit attributable to Ayala Land shareholders totaled ₱11.46 billion, only slightly ahead of Megaworld’s ₱10.95 billion.
For investors, the comparison offers a study in contrasts. Ayala Land has a broader platform, a larger land portfolio, and a deeper collection of commercial properties. Megaworld entered the period with lower leverage and emerged with stronger revenue momentum.
A Property Slowdown Hits Ayala Land
Ayala Land’s main weakness came from its traditional development business.
Property-development revenue fell 22% to approximately ₱41 billion, while residential revenue declined 15% to ₱35.3 billion. Reservation sales, an indicator of future revenue, decreased 19% to ₱53.5 billion. Residential reservations alone fell 22%.
Part of the decline reflected a difficult comparison with the previous year, when Ayala Land recorded sizable commercial-lot bookings. Still, the reduction in residential reservations suggested that the slowdown went beyond accounting timing.
Higher borrowing costs and cautious buyer behavior continued to weigh on the property market. Ayala Land’s exposure to higher-priced developments may have amplified that pressure. Premium projects accounted for 68% of residential reservation sales during the period.
Signs emerged that the decline was beginning to moderate. Second-quarter residential revenue increased 3% from the first quarter to ₱17.9 billion. Total second-quarter revenue was also broadly stable on a sequential basis.
Yet stability from one quarter to the next wasn’t enough to erase the year-over-year contraction. Ayala Land’s parent-attributable profit declined 19.2%, faster than the fall in consolidated net income, while basic earnings per share dropped to ₱0.80 from ₱0.97.
Megaworld’s residential business wasn’t booming either. Real-estate sales increased just 0.4% to ₱27.22 billion. The important difference was that they didn’t decline, and each of the company’s principal revenue segments grew.
Rental income rose 6% to ₱11.37 billion. Hotel revenue increased 11.3% to ₱3.13 billion, supported by new properties, domestic travel, and meetings-and-events activity. Office leasing climbed 4.9%, while mall revenue advanced 8.3%.
That recurring income gave Megaworld a buffer against slow residential growth. Rental and hotel operations together generated ₱14.50 billion, or nearly one-third of consolidated revenue.
The Value of Rent Checks
Ayala Land also relied on recurring operations to soften the decline in development income.
Revenue from leasing and hospitality increased 9% to ₱25.2 billion. Shopping-center revenue rose 4%, office revenue increased 2%, and hotel and resort revenue jumped 28%. Its industrial real-estate and services businesses also recorded double-digit growth.
These operations remain one of Ayala Land’s greatest strengths. The company controls a substantially larger portfolio of malls, offices, and hotels than Megaworld, including investment properties valued at about ₱301.59 billion. Megaworld reported ₱155.71 billion of investment properties at the end of June.
But Ayala Land’s recurring businesses were not yet large enough to compensate fully for the deterioration in property development.
Megaworld, by contrast, combined recurring-income growth with improved residential profitability. Its cost of real-estate sales fell 6.9% even as related revenue edged higher. The company’s reported real-estate gross margin widened to 53.87% from 50.24%, reflecting a more favorable sales mix, pricing discipline and cost controls.
That improvement helped Megaworld increase net income faster than revenue. Its consolidated net margin rose to about 28.7%, compared with approximately 19.4% for Ayala Land. On a parent-attributable basis, Megaworld earned nearly 25 centavos for every peso of revenue, compared with roughly 15 centavos at Ayala Land.
Megaworld did face its own cost pressures. Operating expenses rose 8.5%, well ahead of revenue growth. Interest and other charges increased 28.5% to ₱3.25 billion, largely because of foreign-exchange losses.
Even so, its operating performance showed that a developer doesn’t necessarily need rapid presales growth to improve earnings. Better project margins and a larger stream of rental income can do much of the work.
Leverage Draws a Sharper Divide
The companies’ balance sheets presented an even clearer contrast.
Megaworld ended June with about ₱98.88 billion of interest-bearing loans, bonds and notes. Its debt-to-equity ratio improved to 0.31 from 0.34 at the end of 2025. Net debt-to-equity declined to 0.24 from 0.27.
Interest-bearing loans and borrowings fell 6.4% to ₱77.75 billion as the company repaid maturing obligations and partially settled other debt. Cash and cash equivalents increased 9.4% to ₱22.76 billion.
The company’s current assets were 3.64 times current liabilities, giving it a sizable liquidity cushion. Interest coverage improved to six times from 5.1 times a year earlier.
Ayala Land carried roughly ₱337.61 billion of short-term and long-term debt. Its debt-to-equity ratio stood at 0.85, and net debt-to-equity reached 0.80. Short-term debt climbed 74% to ₱56.07 billion, largely as the company refinanced obligations that had reached maturity.
Ayala Land’s interest-coverage ratio of 5.12 remained comfortable, and the company had completed most of its 2026 refinancing requirements. Its scale, established banking relationships and access to capital markets reduce the immediate danger posed by its higher debt load.
Still, leverage limits flexibility. A larger share of operating cash must be directed toward interest, debt repayment and refinancing at a time when residential demand is weakening. Ayala Land paid ₱9.21 billion in interest during the first half.
That burden was visible in cash flow. Ayala Land generated ₱4.51 billion of net operating cash despite reporting ₱14.57 billion in net income. Megaworld produced ₱7.52 billion of operating cash flow on ₱12.70 billion of net income.
For a capital-intensive business, the difference matters. Developers must continually fund land acquisition, construction and new income-producing assets, often years before those investments produce cash.
Recycling the Skyline
Both companies are using their real-estate investment trusts to raise capital and move mature properties off their parent-company balance sheets.
Ayala Land sold shares in AREIT and completed a property-for-share transaction involving Ayala Center Cebu and Ayala Malls Feliz. Megaworld, meanwhile, continued transactions involving MREIT and approved a planned injection of twelve office, retail and commercial properties.
The strategy allows each developer to monetize completed assets while retaining exposure through a controlling interest in its sponsored REIT. Proceeds can then be recycled into new projects or used to strengthen liquidity.
For Ayala Land, that mechanism is particularly important because of its heavier capital requirements and higher leverage. For Megaworld, MREIT provides an opportunity to expand recurring income while preserving its relatively conservative balance sheet.
The Larger Company, and the Better Half
Ayala Land remains the stronger property franchise in terms of scale. Its estate-development platform, premium land bank and collection of malls, offices and hotels would be difficult to replicate. A recovery in residential reservations could quickly restore earnings momentum because of the company’s operating reach.
But the first half belonged to Megaworld.
It produced revenue growth instead of contraction, expanded residential margins, generated more operating cash and reduced borrowings. Its lower leverage provides room to continue investing even if high interest rates and restrained property demand persist.
Ayala Land’s challenge is not a lack of assets. It is making those assets produce enough growth and cash to justify the debt supporting them.
In a property market where bigger has long been treated as better, the first six months of 2026 offered a different lesson: financial flexibility can be as valuable as the land beneath the buildings.
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Disclaimer: This is for informational purposes and is not investment advice. Figures come from company disclosures and exchange data; valuation ratios reflect the author’s calculations based on cited inputs.
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