“I don’t think we have that big of a problem when it comes to the inventory level because we have not been overbuilding,” SM Prime president Jeffrey Lim told reporters in an interview.
Big picture
Real estate experts said the large inventory surplus in the Philippine capital is due to a combination of the exodus of Philippine Offshore Gaming Operators (POGOs), elevated interest rates, and an influx of new residential condominium supply.
Recent data from Colliers Philippines indicates “substantial unsold inventory in the secondary market” could take five years to be fully absorbed.
Developers are responding by slowing down the launch of new projects in Metro Manila or offering more incentives to buyers.
“A couple of developers are even allowing buyers to move in with a down payment of as low as 5 percent, and discounts of as much as 25 percent of total contract prices,” Colliers Philippines said in its report for the third quarter of 2024.
SM Prime’s solution
SM Prime—through residential SM Development Corp.—is extending payment terms and increasing incentives, Lim said.
The company is ramping up provincial project launches, where growth remains robust, and exploring high-end concepts to meet resilient demand.
“Because of the exit of POGOs, there is some effect on housing demand,” Lim said.
“We’re trying to dispose of existing inventory right now; we’re down to about 16 months,” he said. “The target is to bring it down to 12 months.”
Malls going strong
Lim said the shopping mall segment continues to deliver growth, although recent storms and heavy flooding in SM City Naga will impact their performance.
Lim added that this is anticipated, noting that their malls are also designed to shelter nearby residents during natural calamities.
New malls
SM Prime, which has 87 malls in the Philippines, will open new shopping malls next year in La Union, Zamboanga, Laoag, and a second shopping mall in Sta. Rosa, Laguna, near the Nuvali project of Ayala Land.
For mall renovations, the company will upgrade SM City Cebu, which first opened in 1993, as well as malls in Bacolod and Rosales.
“It’s not just shopping and eating anymore; it’s their experience when they go inside the mall, so that’s why we have to add a lot of amenities, and then we also have to bring in new concepts,” Lim said.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
