SM readies mall expansion in north and south Luzon

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(Source: Business World | July 23, 2018)

SM Investments Corp. is looking at areas in northern and southern Luzon for the next stage of expansion of its shopping mall business, a top official of the Sy-led holding firm said.

“Wala pa kaming northern Luzon, wala pa kaming southern Luzon. Wala pa kaming pababa doon,” SM Chairman Jose T. Sio told reporters after the Sharephil Summit 2018 at Dusit Thani Manila last Friday.

He added that the holding firm of the country’s richest man Henry Sy, Sr. is also planning to further its presence in Mindanao “at the right time.”

Even with a target to have 75 malls in the country by the end of 2018, Mr. Sio said the Philippines is not yet saturated with shopping malls.

The company is opening malls mostly in the provinces in the next three years, with SM City Urdaneta Central, SM City Telabastagan, SM City Legaspi, SM City Ormoc and SM City Dagupan set for opening this year.

In 2019, SM’s property unit SM Prime Holdings, Inc. expects to open SM Daet, SM Butuan, SM Olongapo Central, SM Balanga Bataan, SM Sorsogon, SM Tagum, SM City Tuguegarao, SM Mindoro and SM Grand Central in Caloocan.

SM Prime will also be opening SM City Roxas, SM Calamba Turbina, SM Tanza, SM San Fernando, La Union, SM Laoag, SM Zamboanga and SM Malolos in 2020.

This year alone, the listed conglomerate is spending P75-90 billion to finance its expansion.

Mr. Sio said SM is also interested in buying more retailing brands, as long as they are in a “good location, right time, at the right price.”

The company currently operates more than 2,000 retail brands, after folding over a thousand specialty retail store brands into SM Retail, Inc. such as Ace Hardware, Watsons, Toy Kingdom, and Pet Express in 2016.

Meanwhile, the SM chairman noted the current impacts of technology on the general business environment, citing that disruptions like artificial intelligence could hamper sectors like the business process outsourcing industry in the near future.

“Call centers are not sustainable, they are stagnating. Now they are no longer signing long-term contracts… they only want to sign (for building leases) every year,” Mr. Sio said.

Should BPOs weaken in the coming years, Mr. Sio said office buildings can be converted to other uses.

The company has a combined gross floor area of 464,000 square meters (sq.m.) for its commercial properties group, which it looks to expand by 130,000 sq.m. with the launch of a third office building in the Mall of Asia complex this year.

SM’s core businesses include property, retail, and banking, with its portfolio now expanding to Belle Corp., Atlas Consolidated Mining and Development Corp., CityMall Commercial Centers, Inc., Philippine Urban Living Solutions, Inc., the Net buildings, and 2Go Group, Inc.

SM’s consolidated net income grew 10% to P8.5 billion in the first quarter of 2018, boosted by an 11% increase in consolidated revenues to P95 billion during the period.

 

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