Four of 5 new SM malls to be built outside capital

SM PRIME Holdings, Inc. is building at least 20 malls through 2018 mostly in the provinces, company officials said, as the Henry Sy-owned property giant looks to take advantage of the emerging growth in the countryside.

SM Prime Executive VicePresident Jeffrey S. Lim said in an interview on Wednesday last week that 70%- 80% of those new malls will be located outside Metro Manila.

“We’re moving to the provincial areas,” Mr. Lim said.

“Our mall expansion of 4- 5 malls per year in the Philippines will focus mainly on expanding in the provinces where incomes and aspirations are being enhanced,” SM Investments Corp. ( SMIC) President Harley T. Sy was quoted in the company’s 2014 annual report as saying.

SMIC owns 49.6% of SM Prime, according to regulatory filings.

‘NOT SATURATED’

The real estate firm will build “midsized” malls with a gross floor area of 200,000 square meters in the provinces, SMIC Senior Vice-President for Investor Relations Cora Guidote said in a separate interview.

At that size, those provincial malls will be about as huge as its SM Aura Premier in Bonifacio Global City.

“Metro Manila is not saturated, but it’s getting crowded,” Ms. Guidote said.

Eighteen of SM’s 50 malls in the Philippines are located in Metro Manila, according to the company Web site.

SM Prime’s expansion drive outside the Philippine capital is part of an overall industry trend featuring retailers venturing out of Metro Manila to take advantage of rising disposable income in the provinces as the economy continues to grow, analysts said.

“SM probably thinks that growth will be much smaller that’s why it might be profitable to go outside of Metro Manila,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said by phone.

Astro C. del Castillo, managing director at First Grade Finance, Inc., said: “SM has yet to capitalize on the increasing purchasing power in the provinces. It’s a good way to decongest Metro Manila.”

In selecting sites for expansion, SM Prime is looking at the “spending capacity of the people,” Ms. Guidote said.

“Our big malls are already there [ Metro Manila] whereas in other areas like Visayas and Mindanao, we hardly have any presence yet and there are a lot of underserved areas we can reach out to and bring in the kind of products and services that SM provides,” she said.

“Now you have an economy that’s emerging so many areas will also be emerging as well.”