SM eyes Harrison Plaza redevelopment

PROPERTY giant SM Prime Holdings Inc. is firming up plans to invest close to P40 billion to redevelop the 40-year-old SM Harrison Plaza complex as a partner of the city government of Manila.

In a chance interview, SM Prime chief finance officer Jeffrey Lim said SM was in talks with the city government to rebuild the complex—which stands on a strategic seven-hectare property owned by the city government—into a mixed-use development.

“We will develop the shopping center and put up BPO (business process outsourcing) offices,” Lim said, adding that the lot area had not been fully maximized.

The city government of Manila has indicated plans to bring in SM Prime—a long-time anchor tenant since the Harrison Plaza complex was inaugurated in 1976—as its partner in the redevelopment of the complex.  The city government will, in turn, get a share in the economic interest from this property development.

“It will be a mixed-use development,” Lim said, adding that SM Prime also intended to put up residential towers in the complex.

Lim said the estimated capital outlay for the project was P39.44 billion given that more towers for the office and residential components would be built aside from the redevelopment of the shopping center.

Industry sources, however, said the lease contract with the city government of the long-time concessionaire of the property, the Martel family, had yet to expire.  The same sources said the city government under Mayor Joseph Estrada wanted to bring in a new group with greater financial muscle to redevelop the property so that the city government could unlock more values from it.

Harrison Plaza— located near the Bangko Sentral ng Pilipinas on Pablo Ocampo Street in Malate, Manila—is among the country’s first modern shopping centers but it had lagged behind its peers in terms of redevelopment. As big and modern shopping malls raise the bar for shopping mall development in the country, the city government wants the largest shopping mall developer to take over the project.

Industry sources said the Martel family was paying less than P20 million in annual rental to the Manila City government, which was deemed too low by the local leadership given how the property sector had boomed over the years.

SM Prime, one of the largest property firms in Southeast Asia, has committed to earmark P60 billion for capital outlays yearly in the next three years to achieve its development roadmap.

The group is also continuing its expansion in China and evaluating opportunities elsewhere in Southeast Asia. To date, SM Prime has received proposals to be part of integrated property developments across the region.