SM to invest P2 billion for more malls in Cebu

Retail giant SM Prime Holdings, Inc. (SMPHI) is ready to invest P2 billion for the establishment of two more shopping malls in Cebu, owing to Cebu's dynamic potential for retail business.

In an interview with SMPHI president Hans Sy, he said that the company is currently negotiating with land owners, to acquire at least five to 10-hectare property in both southern and northern parts of Cebu.

According to Sy, SM is interested to put up SM Supercenter and Hypermart in Cebu. The company is expecting to spend at least P1 billion for each facility.

"We are negotiating with several groups, but nothing is final yet," said Sy.

In the Southern part of Cebu, SM is eyeing to open a shopping mall at the South Road Properties (SRP). Sy said the willingness to add two more shopping malls is great but the problem lies on the availability of the property.

In the Visayas area, SM is focusing its expansion move in Cebu. Although, there are also initial plans to expand in Cagayan de Oro, and Davao City.

Among the provincial facilities, SM Cebu is one of the top performers, indicating that Cebu market is ripe for more SM shopping malls.

Last year, SM Cebu registered a four percent growth, despite the ongoing construction of its annex building expansion.

The company on the other hand, posted a 10 percent overall growth in 2005, Sy reported. Sy was in Cebu last week to grace the unveiling of the SM funded road beautification project in the north reclamation area.

The two Cebu SM Supercenter and Hypermart will have a huge supermarket, or grocery component, it will likewise accommodate retail stores.

"We are very bullish for Cebu," Sy said adding that the ideal size for its Supercenter and Hypermart would be at least 60,000 square-meters to 75,000 square meters.

Sy mentioned in an earlier interview that the increasing dollar remittances to the Philippines, from the Overseas Filipino Workers (OFWs), and the growing number of call center workers, are the two main drivers of the Philippine economy.

The increasing dollar remittance in the Philippines, which is projected to grow to P2 billion to P3 billion more annually, is seen to uplift the purchasing power of the Filipinos. He added that the increasing numbers of call center workers are also one of the primary markets for retail in the Philippines.

SMPHI's first outlet in Cebu, the SM City Cebu owns about 18-hectare property at the North Reclamation Area, this already included the area where the unfinished hotel is built. The footprint of the main SM City Cebu mall has utilized about 13 hectares.

In 2005, SM City Cebu registered a double-digit sales performance, amid the country's "perceived" economic struggles, coupled with political instability.

Early last year, SMPHI failed to win the bid offered by Cebu Province to dispose its 2.85-hectare Banilad property, formerly the location of Cebu International School and Cebu Tennis Club, for commercial use on a Build-Transfer-Operate scheme. The property was awarded to Fifth Avenue Property Development Corporation, a consortium of foreign and local capitalists.