SM Prime Holdings Inc. and Ayala Land Inc. (ALI) will likely drive Philippine property sector growth with both expected to gain from macroeconomic improvements, Maybank Investment Banking Group said.

The two companies, developers of the country's largest shopping centers, can expect "continued robust growth" from the mall segment on the back of lower inflation and higher domestic discretionary spending, Maybank said in a report.

SM Prime and ALI were forecast to expand their mall footprint by 2.0 percent annually over the next two years in key geographic areas in the country, including Northern Luzon, the Visayas, and Zamboanga.

"Coupling this with healthy occupancy and rental rates, this should drive mall segment revenues up by 11-14 percent in FY24/25E (fiscal years 2024 and 2025 estimate)," the investment bank said.

The Sy-led property developer remained Maybank's "top sector pick" due to its mall segment, which continues to be the biggest value driver, and its positioning as "one of the largest catch basins for the country's resilient consumption story."

With its mall footprint, strong occupancy rates, and continued rental escalations, Maybank forecast SM Prime to deliver 10 percent earnings growth this year.

The Ayala-led mall landlord, meanwhile, will likely generate a 12-percent increase in revenues in 2024, anchored on sustained expansion in its services and commercial leasing business, the bank said.

Mall top-line growth for both companies, Maybank said, will also likely come from resilient household consumption and the full-rental contributions of recently opened retail centers.

As of end-October of last year, SM Prime had launched four malls and expanded its gross floor area (GFA) by around 395,000 square meters (sq m), bringing its total GFA to roughly 10.9 million sq m.

ALI, meanwhile, debuted the 44,000-sq m One Ayala retail center in the last quarter of 2023 and has since expanded to a total GFA of 2.2 million sq m.

"We expect these mall operators to further capture consumers as they offer more modern retail formats in key locations," the bank continued.

In the residential segment, Maybank said the anticipated policy rate cuts by the second half would help revive demand from low- to middle-income buyers for both real estate developers.