The Mall of Asia, built at a cost of P6.5 billion, is expected to contribute about three to five percent to the SM Group’s revenues this year, rising to 10 percent in the long-term. SM Prime Holdings Inc.’s 25th mall measures 400,000 square meters with provisions for expansion.
Located on a 60-hectare property overlooking Manila Bay, Mall of Asia will open with an initial 72-percent occupancy rate.
The mall is about half the size of the South China Mall in Dongguan, China – said to be the world’s biggest mall – but about 30 percent bigger than the Mall of America, the second-biggest shopping center in the United States.
It took the SM Group two-and-a-half years to build Mall of Asia, which was designed by Arquitectonica, a US-based designing firm which also did Festival Walk in Hong Kong, American Airlines Arena in Miami, Westin Hotel in Times Square, New York, and Disney All Star Resort in Florida.
Mall of Asia will host over 600 local and international brands and over 150 indoor and fine dining outlets.
It will house the country’s first IMAX theater, whose screens measure 22 by 30 meters – approximately the height of an eight-storey building and will be able to seat 600 people, and seven more state-of-the-art cinemas.
The mall will also feature the country’s first Olympic-sized skating rink in addition to a bowling and billiards hall and an indoor theater for live performances with a seating capacity of 900.
Envisioned as the "destination mall," Mall of Asia will bring the total gross floor area of all SM Group’s operating malls across the country to 3.4 million square meters.
Hans Sy, president of SM Prime, said the Mall of Asia is expected to generate employment for close to 10,000 people and contribute substantial amount of taxes for the government.
What encouraged us to do this is the robust remittances from overseas Filipino workers.
We believe the Philippines and the company can benefit from this," Sy said.
"We are a nation of mall lovers with millions flocking to our air-conditioned malls daily and more so on weekends," Sy added.
Aside from Mall of Asia, SM Prime is scheduled to open four more malls this year.
"(Henry) Sy has a very good reading and understanding of the Philippines,’’ said Donald Gimbel, senior managing director at New York-based Carret & Co., which manages about $2 billion, including shares in Sy’s SM Investments. "I don’t doubt this will be among his successful ventures.’’
Sy, who became the nation’s second-richest man parlaying a shoe store he founded after World War II into the biggest Philippine retailer, started planning Mall of Asia in 1995. Its opening, delayed by the 1997-98 Asian financial crisis, comes as rising taxes may damp purchasing power but Sy is betting tourists will help keep his shops full.
The country is a "natural destination" for travelers from wealthier neighbors because of its central location, beaches and friendly, English-speaking population, Sy said in an interview.
The Philippines forecasts tourist arrivals to rise 15 percent to a record three million this year. To do that, the nation, which lags neighbors Thailand, Indonesia, Malaysia and Singapore in drawing travelers, is spending $17 million to promote its beaches and Spanish churches to tourists.
Rising tourist arrivals could help an economy that’s the smallest among 14 Asia-Pacific economies tracked by Bloomberg, while ranking sixth in population size.
"The risk facing the mall is it’s opening at a time when purchasing power is getting diluted by higher taxes and rising oil prices,’’ said Junie Banaag, who helps manage more than P1.1 billion in First Metro Investment Corp.
The Asian financial crisis forced Sy to halt plans to build the mall by 1998. "The crisis made us conservative," said Hans Sy. SM Prime instead opened smaller malls that helped it earn a record P4.97-billion profit last year on P11 billion revenues.
About 30 cents of every US dollar sent home by Filipinos working abroad is spent shopping and about half of that is probably spent in Sy’s malls, according to Macquarie Securities. The tycoon’s Manila malls account for a third of the capital’s shopping space, Macquarie estimates.
"It (Mall of Asia) will be a destination mall, offering almost everything the Philippines has to offer,’’ said Sy, who used the slogan "We’ve got it all" in building his retailing empire.
Mall of Asia is the centerpiece of Sy’s 148-acre SM Central Business Park, which he’s filling with a convention center, a sports coliseum and office and residential towers.
The tycoon, worth $1.5 billion according to Forbes, opened his first mall in 1985, when the economy had its worst post-World War II slump. He opened Megamall in 1991, when the economy contracted 0.6 percent, hurt by coup attempts and power shortages.