On Friday, SM Prime unveiled the SM Residences premium line, set to debut within a 200-hectare development, though the location remains undisclosed.
SM Prime, known for developing malls and residential condominium units, is also targeting a wider and more upscale price range from P25 million to over P100 million, challenging markets controlled by developers such as the Zobel family’s Ayala Land and Lopez-led Rockwell Land.
Big picture
SM Prime said the moves align with a “strategic reformat and expansion of its portfolio,” as the high-end and leisure segments remain resilient despite challenges in the real estate sector.
Recent reports from Leechiu Property Consultants and Colliers Philippines highlight a massive oversupply of condominium units and homes in Metro Manila, partly due to the looming full exit of Philippine Offshore Gaming Operators and relocation of businesses outside the capital.
Experts warned that it could take several years for the market to absorb this excess inventory.
Management’s view
“The price adjustments will allow us to target a broader segment of the housing market. It will also enable us to better address the growing demand for affordable and quality housing, while contributing to the government’s efforts to reduce the housing backlog,” said SM Prime president Jeffrey Lim.
SM Prime’s brand consolidation, restructuring
The developer is also combining brands under SM Residences.
This will cover a range of offerings from economic, medium-cost, premium and leisure developments.
Huge landbank
The builder has over 1,000 hectares of land for its SM Residences projects, slated for development over the next five years.
It said the bulk, or 85 percent, is earmarked for horizontal development.
“Our growth over the past 30 years has been largely driven by our market-leading position in the mall and retail segment,” Lim said.
“As we move forward, our goal is to unlock the full potential of our extensive land bank through SM Residences and more integrated developments. This will enable us to sustain long-term growth across a broader business portfolio,” he added.
Analysts’ view
Joey Cipres, research analyst at AP Securities, rated SM Prime a “buy” in a Nov. 5 report, stating healthy prospects especially in their mall developments. The stock brokerage house has issued a target price of P40.30 for SM Prime.
“We continue to view these progressions as something that would result in a substantial boost in the company’s earnings with [SM Prime] continuing to dominate the mall scene,” Cipres said.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
