SM turns shy on China, aggressive on massive Manila Bay project

Property giant SM Prime Holdings Inc. has proposed to double its Manila Bay reclamation project spanning the coastal areas of Pasay and Paranaque to 1,200 hectares, potentially creating a new urban hub bigger than Mandaluyong that will require greater capital outlays of around P150 billion.

In a chance interview with Inquirer last week, SM Prime chair Henry Sy Jr. said the property company had submitted proposals to reclaim 600 hectares more on top of the initial 600-hectare reclamation projects proposed five years ago.

“I’m trying to get another 600 hectares,” Sy said, noting that with a fresh landbank of 1,200 hectares, coupled with the proposed reduction in corporate income taxes and a “proper” airport, the metropolis could be transformed into the “next Singapore or Hong Kong.”

SM Prime is now awaiting the green light to proceed with an initial 300-hectare reclamation project already cleared by Pasay. Sy is hopeful that the initial 300-hectare reclamation project on the Paranaque side could start after a year.

Before the government required that the reclamation project pass through the National Economic Development Authority (Neda)/Investment Coordination Committee screening under the public-private partnership (PPP) framework, the Pasay project has already made it to advanced stages. Paranaque has approved the project as well but more procedures beyond the LGU need to be hurdled.

SM Prime is currently finalizing the design of the Pasay reclamation project for approval by the Philippine Reclamation Authority, which will in turn endorse it to the Office of the President.

The two reclamation projects will require capital outlays of around P150 billion, which could be undertaken over a five-year period, Sy said. It was previously estimated that the two initial projects with Pasay and Paranaque would cost around P54 billion each.

“We’re anticipating we’re using a lot of capex (capital expenditure) in the reclamation,” Sy said, adding this was also part of the reason why SM Prime was slowing down on its expansion in mainland China. The group had planned to build one new mall in China every year.

Opportunities are seen to be robust in the Philippines, where demand for real estate is so strong that it’s a challenge, even for the country’s largest property firm, to keep on replenishing its landbank. The acquisition of the 20-hectare Ashmore lot along Manila Bay, Sy said, would meanwhile help sustain the company growth.

Sy said the bay area would overshadow even BGC. The project will be the single biggest property development project in Metro Manila in recent history.