SM Investment Corp. plans to build a string of boutique hotels of 50 rooms each near the SM malls nationwide. For starters, the conglomerate is assessing possible sites in 14 malls.

SM is currently building a series of residential condominium buildings adjacent to its malls. Merril F. Yu, SM Investments senior vice president for hotel investments group, said the the company will break ground in two ‘beta sites’ next year.

The two ‘beta sites’ would be operational by end 2009, according to Yu. ‘This will allow to capture the synergy of two existing structures and add value to them’, said Yu. Yun said SM will invest P1.7 million per room for its hotel business.

SM Investments would tap outside expertise in running the hotels, according to Yu. SM Investments earlier also used its mall as a pivot factor in developing its condominium development in two projects in Manila.

‘SM Mezza’ is a four tower residential project SM Developments Corp., SM Investment’s unit, is developing adjacent to the SM Sta. Mesa mall.  The ‘Grass Residences’ meanwhile is a similar three-tower development that will rise beside the SM North Edsa in Quezon City. 

SM Investments meanwhile intends to spend roughly P26 billion for capital expenditures by 2008, with focus on property, tourism and mall development. SM Investments executive vice president Jose Sio said roughly P15.6 billion would be spent for property development.

About P6 billion will be set aside for mall expansion and SM’s retail and banking businesses will be budgeted P2 billion and P2.3 billion respectively. Sio said about P7 billion of the intended capex ‘may be funded by borrowings’ with the balance to come from cash from operations.