SM Prime Holdings, Inc. is seen weathering headwinds in China as the property holding firm of Henry Sy, Sr. — the country’s richest man — pushes through with its expansion plan, including its maiden residential offering, in the world’s second largest economy.
 
SM Prime is investing as much as P6 billion to develop a four-tower residential complex with over 1,000 units near its mall in Chengdu, Jeffrey C. Lim, the company’s executive vice-president, told reporters last week.
 
Likewise, SM Prime is keeping its target of opening one mall every year despite the recent rout in China’s stock market, Mr. Lim said, noting that the property conglomerate has always been conservative with its expansion.
 
SM Prime is launching, towards the end of the year, a portion of its biggest China mall in Tianjin — its seventh in the mainland — with a gross floor area of 540,000 square meters. The firm is also hoping to start the construction of a new mall in Yangzhou this year.
 
“What is happening especially in the stock market, it’s really more of a realization in a sense that a lot of people has been trading on the market,” Mr. Lim said.
 
“But if you talk about the retail on the ground, it’s still growing. I think we should be able to withstand whatever headwinds or problems these events will have on our investments,” he added.
 
SM Prime had allocated a yearly budget of P20 billion for the expansion of the property conglomerate’s mall business, as well as to support its foray into residential development and grow its land bank in China.
 
BIGGER CONDOS
The Philippine developer is in the process of securing from Chinese authorities building permits for its first residential project, which is targeted to break ground this year, said Jose Mari H. Banzon, SM Prime residential business unit head.
 
“We’re confident that once we complete and do the top-off and because the mall is now mature, we’re expecting good sales velocity,” Mr. Lim said. The Chengdu mall opened in 2008.
 
Developers in China must finish the residential project first before they can start selling the units, unlike in the Philippines where property firms conduct pre-selling before constructing the development.
 
SM Prime’s residential project in China will offer units with a minimum size of 40-50 square meters (sqms.), bigger than their counterparts in the Philippines at 24 sqms. Each tower will cost 150 million to 200 million renminbi or P1.4 billion to P1.5 billion, Mr. Lim said.
 
More residential projects will follow in Xiamen and Jinjiang — where SM Prime also has existing malls, Hans T. Sy, the company’s president, said in April.
 
SM Prime is part of SM Investments Corp., which has core businesses in retail, banking and real estate. The family also has interests in gaming, geothermal energy and infrastructure.