SM stepping up China expansion

Property giant SM Prime Holdings Inc. may accelerate its growth in China by considering shopping mall acquisitions in Fujian province, a departure from its earlier strategy of building malls from scratch.

SMPH director Hans Sy said the group was still looking for expansion opportunities in China but land banking had become more expensive.

Sy said SMPH was still continuing its expansion in Asia’s largest economy, where there were six operating SM shopping malls, with another one in Tianjin set to open by this year.

“We may even look into acquisition of some. But there’s nothing (definite) yet,” he said.

SMPH’s existing malls in China had been built from the ground up. They are in second- or third-tier cities where competition was less intense.

Sy said there were existing malls in China that were on the auction block.
The shopping malls that are currently for sale are quite sizeable, with leasable areas of about 150,000 square meters.

“There are those companies which are selling chains of malls but I’m interested only in Fujian province,” he said.

Fujian, which is on China’s southeastern coast, is where SMPH started its offshore expansion program in the early 2000s and it is where the SM brand is most recognizable.

SMPH debuted in China in 2001 when it opened SM City Xiamen in Fujian province. This mall expanded in 2009 with the opening of the SM Xiamen Lifestyle mall.

In 2005, SM opened its second mall in Jinjiang City in Fujian province, the hometown of patriarch Henry Sy Sr.
It later opened SM City Chengdu. SM expanded to Jiangsu province in 2011 with the opening of SM City Suzhou in Wuzhong District, followed by the opening in 2012 of SM City Chongqing in the Yubei District, Southwest China. In 2015, SM City Zibo in Zibo City was opened in Shandong province.

To date, China malls account for 5-6 percent of SMPH’s total business. The strategy moving forward is to add one new mall per year.