Vol. XXII, No. 56 [ BusinessWorld Online ]
Monday, October 13, 2008 | MANILA, PHILIPPINES
CEBU — Mall operator SM Prime Holdings, Inc. plans to open one or two more malls in China even as it continues to expand its mall network in the Philippines over the next five years.
Expansion in China would be initially slow as the company tries to build its brand, strengthen its organization and gather financial strength, SM Prime President Hans T. Sy said.
"Our China direction mirrors our growth story," Mr. Sy said on the sidelines of a project launch.
He noted that when the company went public in 1995 it had only four malls. The company now has 31, but the last 17 malls were built in the last five years, he pointed out.
Last week, the mall operator launched its SM City Cebu Northwing, the annex building that provides an additional leasable area of 17,677 square meters. The SM mall in Cebu, which has a total leasable area of about 130,000 square meters, is the fourth largest in the country.
China, however, is the next logical site for expansion when SM Prime completes its targeted 45 malls in the Philippines, Mr. Sy said.
The company’s 31 SM malls nationwide have a gross floor area of nearly three million square meters. Its biggest is the Mall of Asia in Pasay City and the newest is SM Marikina, which was opened last month.
"We’re looking at 45 [malls] here... What comes next? That’s where China comes in. But we need to build up our brand there first. Here, everybody knows SM. But not many know about SM in China," Mr. Sy said.
SM recently acquired three malls in China and is building a fourth mall in Chongqing, the commercial capital of southwest China. The existing malls are in Xiamen, Jinjiang and Chengdu.
The Chongqing mall will be completed in two years. In the meantime, Mr. Sy said, they are keeping their radars for other opportunities in China.
SM Prime is eyeing growth of 5% to 10% and is proceeding with its expansion plans this year despite the financial crisis in the US and Europe.
To fuel growth, SM Prime is banking on Filipinos working abroad and their relatives, as well as on shoppers who may have to stay in the country instead of going to Hong Kong and other shopping destinations overseas.
"I was in Hong Kong and I assured and reassured our investors that we are very much on track and we are still continuing with our expansion program. We’re not affected by the crisis," Mr. Sy said.
SM Prime is scheduled to open malls in Pangasinan and Bulacan and expand SM Megamall and SM Fairview later this year.
Mr. Sy said they have kept communication lines with the Cebu City government open for a planned mall at the South Road Properties, a 300-hectare greenfield development in the southern part of the city. SM Prime is also looking for properties in the northern part of Cebu.
There are four SM malls in the Visayas — one in Cebu, one in Bacolod City and two in Iloilo City. The plan is to build three or four more, Mr. Sy said.
Meanwhile, SM Investments Corp., the holding company of the Sy family’s SM Group, does not plan to list unit SM Land, Inc. on the stock exchange.
"I don’t think that is the plan. We’re just consolidating all property assets in SM Land," said Mr. Sy, who is also the first executive vice-president of SM Investments Corp.
SM Group consolidated its property assets under Shoemart, Inc. last year. Shoemart has been renamed SM Land as the company tries to be more transparent and unlock the value of its assets.
Mr. Sy said SM Land is on the lookout for properties to develop outside Luzon. SM Land projects are all in Luzon, including Hamilo Coast, a 5,700-hectare network of coastal resort communities in Nasugbu, Batangas. — Marites S. Villamor
