SM Prime chair Henry Sy Jr., president Jeffrey Lim and director Hans Sy at the property firm’s stockholders meeting on April 25, 2017
Property giant SM Prime Holdings Inc. is diversifying into upscale residential condominium and subdivision development this year alongside plans to put up new shopping malls in line with a P50- billion annual expansion program.
This year, SM Prime is set to open five new shopping malls in the Philippines which will bring its mall portfolio in the country to 65 plus seven malls in China.
In the residential segment, SM Prime’s property arm SM Development Corp. (SMDC) is set to launch 15,000 to 18,000 residential units in high-rise, mid-rise as well as house and lot developments, SM Prime president Jeffrey Lim announced during the company’s annual stockholders meeting on Tuesday.
This is more aggressive than the 15,000 residential launches of SMDC last year. Sales take-up last year stood at 12,700 units.
SMDC is upbeat on the residential segment this year, with sales take-up in the first quarter rising by 54 percent year-on-year to P12.9 billion.
Overall, SM prime expects to sustain a double-digit growth in earnings in line with a five-year plan to double profit by 2018.
This May, SMDC is set to launch its first subdivision development on a 30-hectare estate in Mabalacat, Pampanga, which is expandable by another 30 hectares. This project, which is estimated to cost P1.4 billion, will offer up to 5,000 units within the price range of P1.8 to P2.5 million. The initial phase of development will offer 1,000 units.
“We’re completing the whole package for residential and we may even go to high-end (development),” SM Prime chair Henry Sy Jr. said in a press briefing after the stockholders meeting. He added that the group was “very confident” on entering new market segments and new geographical locations and was set to utilize the group’s 1,500-man sales force. The foray into the upscale residential segment may happen within this year, he said.
In mainland China, SM Prime will also continue its expansion. It has started construction of its first residential project in Chengdu, near its existing SM shopping mall.
Hans Sy, recently retired SM Prime president who now chairs the executive committee, said the group would continue to explore opportunities in China, particularly in Fujian province. Although SM Prime has built all of its malls in China from scratch, he affirmed that the group was open to opportunities to buy existing malls.
SM Prime allocates 80 percent of its capital expenditure on project developments, mostly for mall and residential development. The remainder is used for landbanking.
“SM Prime will continue to expand its mall and residential businesses which are the major revenue drivers. We will further reach out to provincial cities as an integrated property developer and as a strategic partner, given the tremendous opportunities in light of higher government spending on infrastructure development across the country,” Lim said.
This year, SM Prime is scheduled to open five new malls in the Philippines, all of which are outside Metro Manila. These are: SM CDO Downtown Premier in Cagayan de Oro, SM Cherry Antipolo in Rizal, SM Center Tuguegarao Downtown in Cagayan, SM City Puerto Princesa in Palawan and SM Center Lemery in Batangas. By the end of 2017, its 65 malls in the Philippines and seven malls in China will have a combined gross floor area of 9.2 million square meters. In the Philippines, 43 percent of its malls are located in Metro Manila, 35 percent in Luzon outside Metro Manila, 14 percent in Visayas and 8 percent in Mindanao.
SM Prime has committed P50 billion for capital outlays annually to achieve its development roadmap through 2018. Lim said SM Prime was on track with its five-year roadmap.