December 11, 2017 | MANILA, PHILIPPINES

After China, SM Prime sets sights on ASEAN

AFTER DOMINATING the Philippines and expanding in China, SM Prime Holdings, Inc. is set to brave new markets as the property development arm of the Sy family looks to kick off its foray into Southeast Asia next year.

SM Prime Chairman Henry T. Sy, Jr. said in a chance interview the country’s biggest mall developer will “come out with a decision very soon,” but declined to provide specific details.

“I’m going to ASEAN also. By next year, mag-uumpisa na. Pina-study ko na ’yan (It will start next year. I already asked them to study this),” the son of the country’s richest man, Henry Sy, Sr., said.

SM Prime has 60 shopping malls in the Philippines covering 7.7 million square meters (sq.m.) in gross floor area (GFA). So far, its overseas expansion has been focused on China where it has seven malls with a GFA of 1.3 million sq.m.

“It makes business senses because demographics-wise, the markets are similar; gross domestic product (growth) of these countries are averaging 5-6%; and access is nearer. They are also frontier markets,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said in telephone interview.

There may be opportunities for expansion outside key cities in the Philippines for mall developers, but the smaller-format commercial developments may work better in the countryside, Mr. Limlingan said.

The looming action of SM Prime follows Ayala Land, Inc. (ALI), which has expanded its presence to Southeast Asia.

ALI acquired a 9.16% stake in Malaysian property and construction firm MCT Bhd in April 2015 and within the same year, the real estate firm raised its interest to 32.95%. The property company is also looking at investment opportunities in Vietnam, Indonesia, and Myanmar.

Earnings of SM Prime fell 16% to P24.36 billion from P28.89 billion without the impact of a P7.41-billion one-time gain from the sale of a portion of its listed shares to parent SM Investments Corp.

SM Prime is on the fourth year of a five-year program that entails a capital spending budget of P400 billion to beef up its businesses that will double earnings by 2018.

For 2017, SM Prime will open at least four new malls in the Philippines with an estimated combined 300,000 sq.m. of additional shopping space.

SM Investments, owned by the country’s richest man Henry Sy, Sr., has core businesses in retail, banking and real estate. The family also has interests in gaming, geothermal energy and infrastructure.