XIAMEN, China—SM Prime Holdings Inc., the largest mall developer and operator in the Philippines, is spending about 3.58 billion yuan (P23.3 billion) to establish four additional shopping centers in China over the next three years, a top official said.
In an interview with business reporters over the weekend, SM Prime vice president for finance Diane Dionisio said the amount includes the equivalent of P13 billion to put up a shopping center in Tianjin City, which borders the Chinese capital of Beijing.
The mall is expected to have 530,000 square meters (sqm) in gross floor area (GFA) making it the single-largest shopping center of the Henry Sy-owned company when it opens its doors in 2013.
Annie Garcia, SM Supermalls president, said other malls to be opened in the Chinese mainland include SM Suzhou (a city in Jiangsu province) in December this year, SM Chongqing (a major city in southwestern mainland China) in 2011 and SM Shandong in 2013. The company is also exploring Fuzhou City (the capital of Fujian province) as a possible location for a new SM mall.
SM Prime wants to aggressively expand its presence in China before taking these assets public, either through a public listing or via real estate investment trust (REIT), to cement its presence overseas.
SM officials?said on previous occasions that SM Prime can take any of the two options once it has established eight to 10 malls in China.
The company presently has four Chinese malls operating in three locations—in Xiamen, Jinjiang and Chengdu.
The company’s China malls contribute about 5 percent or P610 million in revenues as of the first half of 2010. SM Prime said the average occupancy rate in these shopping centers is 87 percent.
SM Prime recently opened its second mall in Xiamen City, ?the SM Lifestyle Center, to target the upper-income segment. ?
The developer is looking at introducing this high-end concept, where shoppers can spend up to 100,000 yuan (P650,000) to take advantage of the rising affluence in China, said mall manager Marcus Dee.
“We are in position to tap the middle high-end buyers,” Dee said. “The [competitors] are ignoring this sweet spot in the market.”
The two SM malls in Xiamen account for almost a quarter of the city’s customer base, with its population of 2.75 million.
SM Prime earlier reported that first half net income rose by a tenth to P3.8 billion, as total revenues rose to P11.3 billion from P9.6 billion in the same period last year due to the addition of more malls. It has allotted P12 billion this year to launch four new malls in the country and one in China.
The company expects to have a total of 44 malls by the end of the year, of which 40 will be in the Philippines, with an estimated total GFA of 4.7 million sqm.
As this developed, the SM Group of Companies, in partnership with US-based Carlson Hotels, plans to begin its second Radission hotel near the Mall of Asia Complex in Pasay City next year. This, after opening the 400-room Radisson Blu Hotel in Cebu, the chain’s first in the Asia-Pacific region,
The group, through SM Hotels and Conventions Corp., plans to build at least seven hotels before taking this unit public through the proposed REIT law, said company officials in a separate interview last week.
SM Prime and SM Hotels are subsidiaries of the group’s flagship, SM Investments Corp., a company listed on local stock exchange which also has businesses in retail merchandising, banking and real estate development.