SM Prime fast-tracks expansion plan

MANILA, Philippines - The residential builder of SM Group’s umbrella property firm SM Prime Holdings Inc. is fasttracking its expansion program this year, banking on the growing housing backlog in the metropolis.

SM Development Corp. (SMDC) is launching seven new projects totaling 15,000 residential units this year while expanding its portfolio to economic and upscale housing, executives said.

“There will be four new projects and three expansion, so seven projects with 15,000 inventory,” said SMDC executive vice president Jose Mari Banzon.

Banzon said the expansion program is more bullish compared with last year when the company introduced 12,000 residential units to the market. In 2013, real estate sales of SM Prime hit P20.78 billion with three new residential condominium projects.

SM Prime chief finance officer Jeffrey Lim said the backlog of 500,000 housing units is expected to grow to 6.5 million by 2030.

“Therefore, vertical developments are expected to be a major beneficiary as the market becomes increasingly willing to trade slightly smaller floor space for the greater convenience of in-city living,” Lim said.

SM Prime chairman Henry Sy Jr. said SMDC, which thrives in the P2.5 million to P3 million price range, is also looking at economic housing units worth P1.5 million and high-end projects worth more than P3 million.

SM Prime president Hans Sy said the company allotted P70.57 billion for its capital expenditures this year, of which 55 percent is for the shopping malls, 28 percent for the residential segment, and the balance for offices, hotels and convention centers.

In May, mall and banking giant SM Group announced the merger of its real estate businesses. It merged upscale Tagaytay Highlands developer Highlands Prime Inc., condominium builder SM Development Corp., private firm SM Land Inc. and mall developer SM Prime.

“There are still going to be two major segments: malls and residences. These will continue to be the major component of growth in the next five years,” Lim said.

SM Prime is doubling its income and revenues in the next five years as it grows its office, mall, leisure, hotel and residential portfolio by two-fold in the same period through a P400-billion investment.

For the residential segment, SM Prime will complete the launch of 139,628 units for 41 projects by 2018 from the current 63,892 units in 21 projects.

Given the integration of SM Group’s property units, SMDC is looking to build condominium projects near shopping malls.

“What we’re doing now is we are looking at places where we have malls, inside and outside Metro Manila, to see where we can develop residential projects,” Banzon said.