SM Prime sets P20-B annual budget for China expansion
MANILA, Philippines – SM Prime Holdings Incorporated will continue to spend P20 billion ($448.58 million) annually in China as part of its capital expenditure (capex) until 2018.
The programmed expenditure started in 2014.
Bulk of the budget will be spent on building new shopping malls and acquiring new properties. A small portion is set aside for residential development, SM Prime executive vice president Jeffrey Lim said in a briefing following the company’s annual stockholders meeting Tuesday, April 14.
SM Prime president Hans Sy said the company is aiming to have 9 malls in China by 2018. The company already secured 4 more new sites for expansion programs.
The company has 5 shopping malls located in in Xiamen, Jinjiang, Chengdu, Suzhou, and Chongqing.
Two more China malls are expected to open this year: SM Zibo and SM Tianjin.
Lim said the group plans to borrow at least 40% of the P400 billion ($8.97 billion) programmed spending from the debt market while the remaining 60% will come from internally generated funds.
SM Prime earlier said it will spend P80 billion ($1.79 million) to support its aggressive expansion program.
First residential project
The company also started its first residential project in China near it shopping mall. It has 300 to 400 units catering to the middle income market.
Future residential projects in China will also be located within existing malls in Xiamen and Jinjiang.
Sy said because of lower cost of materials in China, residential units being sold in there are priced at an average of P900,000 ($20,180.30) per unit compared to P2 million ($44,843.13) average unit price being sold in the Philippines.
SM Prime Chairman Henry Sy Jr said now is the right time to invest in China despite cooling property prices in that country.
“I do believe that it’s the best time to go in because land prices are still up within our mall areas and a lot of competition are not that aggressive because of some circumstances in China,” the Sy Jr said. – Rappler.com
US$1 = P44.60