SM Prime President Hans Sy

MANILA — SM Prime Holdings, the Philippines’ top shopping mall operator, is embarking on an expansion kick.

As the country’s economy booms, the company intends to build up its network of shopping centers to 75 over the next five years, according to president Hans Sy. The company had 48 domestic locations as of last year.

“After 75, it might be on the saturation side,” Sy said. “But five years from now, the population will still grow, the economy will still grow, so I don’t really know.”

Sy’s father, Henry, founded SM Group in Manila in the 1950s. It started as a shoe business. The Sy patriarch, now the Philippines’ richest man, ventured into malls in 1985.

In addition to the 48 existing domestic malls, the company runs five Chinese shopping centers in the cities of Xiamen, Jinjiang, Chengdu, Suzhou, and Chongqing.

Sy could not say how much the expansion will cost, as SM Prime’s new five-year corporate plan is still being finalized.

Primed for acquisitions

SM Prime used to be purely a mall builder and operator, but last year SM Group consolidated all its property assets under the holding company. The consolidation, according to SM Group, made SM Prime the biggest property conglomerate in Southeast Asia. It holds office, residential and leisure assets.

This year, SM Prime is set to open two malls in the Philippine provinces of Isabela and Rizal in Luzon, plus another one in Zibo in China. The new malls will comprise 55% of the company’s 70 billion peso ($1.56 billion) capital spending budget for 2014.

While past expansion has mainly been organic, Sy said acquisitions will be a focus of the five-year program. He noted that the company is eyeing targets in prime locations.

“Many deals are ongoing,” Sy said. “Most, if not all, are acquisitions.”

Thirty-one of SM Prime’s 48 Philippine malls are in the provinces, while the rest are in Metropolitan Manila. Sy said the expansion is a vote of confidence in the Philippine economy, whose 7.2% growth last year was driven largely by domestic consumption. The consumer spending, in turn, was fueled by record-high remittances from Filipino expats, as well as a thriving business process outsourcing industry. The latter is creating jobs and putting more cash in citizens’ pockets.

Sy said he is “positive” the country’s economy will continue to grow. “The Philippine market is far from saturation,” he stressed.

SM Prime’s revenues climbed 4.5% to 59.79 billion pesos last year from 57.22 billion pesos in 2012, with rental revenue surging 11% to 32.2 billion pesos. Expenses incurred in the consolidation process tempered the revenue growth.