We remain partial to Ayala Land Inc. (ALI) as we note management stating a shift towards heavier focus on horizontal developments, mostly outside Metro Manila, while waiting for vertical inventories to start coming down. This is shown through several Ayala Land Premiere (ALP) Horizontal developments, namely; Park Estates Alviera in Pampanga, Ayala Westgrove Heights in Cavite, and Ayala Greenfield Estates in Laguna. ALI\u2019s push to greener pastures outside Metro Manila lends further weight to our BUY rating on the stock with a Target Price of P41.67.<\/p>\n\n\n\n
The Bangko Sentral\u2019s RREPI (Residential Real Estate Price Index) data for 3Q 2023 came out last week, rising 12.9% YoY and 3.4% QoQ. By geographic segment, NCR and AONCR (Areas Outside NCR) saw a rise in prices of 12.3% and 14.3% YoY respectively. This can be seen as a result of demand in the residential sector slowly shift towards places outside the Metro Manila area as infrastructure build-up opens up new growth corridors.<\/p>\n\n\n\n
Despite elevated interest rates, we saw overall RRELs (Residential Real Estate Loans) granted in the Philippines grow by 6% YoY, mainly driven by AONCR (+15% YoY) which was slightly dragged down by NCR (-9.3% YoY). The decline in NCR was more pronounced in loans granted for new housing units, as NCR RRELs for this segment slump by 11.9% YoY, offsetting AONCR\u2019s 5.1% YoY growth. Single House and Condominiums continue to be the beneficiaries of these loans at 48.2% and 36.3% of overall RRELs granted.<\/p>\n\n\n\n
As we see some demand shift outside NCR, a stock pick for this segment would be Sta. Lucia Land Inc. (SLI) given their push to develop projects outside MM as displayed by the company\u2019s recent and planned land acquisitions. We note that 97.3% of their land acquisitions are composed of properties in high-growth peripheral areas of Metro Manila, notably in Rizal, Bulacan, Batangas, and Laguna. We currently have a BUY rating on SLI with a Target Price of P3.18.<\/p>\n\n\n\n