SM Prime Holdings Inc. (SMPH), the shopping mall development arm of the Sy group, is spending P1 billion for the construction of its fourth mall in China later this year. 

At the sidelines of the company’s annual stockholders meeting Thursday, president Hans T. Sy said the investment is on top of this year’s P6-billion capital spending for local expansion. The mall will be located in Chongqing, southwest China’s commercial capital. 

“The mall will have a gross floor area of 140,000 square meters and is up for completion by 2010,�? Sy said.

SMPH has three existing malls in the southern and western parts of China, namely, Xiamen, Jinjiang and Chengdu.

The mall in Xiamen was the first to open in December 2001. It has a gross floor area (GFA) of 128,000 square meters (sq m), almost similar in size to SM City Santa Mesa and is 100-percent occupied.

SM Jinjiang opened in November 2005 with a GFA of 170,000 sq m and occupancy of 74 percent.

Opened last year was SM Chengdu with a GFA of 170,000 sq m and a 71-percent occupancy rate.

“China is still a relatively new area for us and we will remain conservative in our approach when it comes to investing there,�? Sy said.

In the next five years, SMPH plans to build three to four additional malls in China as part of its long-term growth strategy.

For his part, executive vice president and chief finance officer Jeffrey Lim said it would still be the local operations that will carry the growth for SMPH.

“While the three existing malls in China are all profitable, we expect them to only contribute 3 percent to our revenues this year and probably around 10 percent in the next 10 years given their small size compared with the local malls. But the potential for growth is huge,�? Lim explained.

SMPH, whose shares are listed on the stock exchange, acquired last year the China-based malls owned by the Sy family for P10.8 billion.

The purchase was done via a share swap deal where SMPH issued 913 million new shares to the Sy family, valued at around P11.86 per share.

SMPH reported a net income of P5.97 billion in 2007 and said the acquisition will allow them to gain a foothold in China’s fast-growing economy and use this as a platform for long-term growth outside of the Philippines, where it is already the most dominant player.

“These are similar in demographics to the existing three malls and, in a way, to the Philippines. Management believes that the growth in these areas will be strong given the expansion of the middle-income sector and rising consumer spending,�? it said earlier.