SMDC budgets P40 billion next year for Philippines, China residential projects

MANILA, Philippines - SM Development Corp. (SMDC), the residential development arm of retail magnate Henry Sy, is allocating as much as P40 billion next year for domestic projects and its initial foray into China’s residential market to ensure a stable platform for growth.

In a briefing with reporters yesterday, SMDC chief executive officer Henry Sy Jr. said the company is setting aside P18 billion to P20 billion for residential projects here while about two billion to three billion renminbi; (approximately P19.2 billion) will go to the construction of two apartments in China.

Sy said the company, through a soon-to-be formed wholly-owned subsidiary, is looking to put up residential buildings in Xiamen and Jinjiang where its sister firm SM Prime Holdings has existing shopping malls. The group is also eyeing a future site for expansion in China.

The Xiamen building will rise on a two-hectare lot while the Jinjiang apartment will sit on more than four hectares of land.

 “Our plan is to put up affordable yet five-star quality residential buildings. Construction should take place next year. We’re in the process of securing permits,” Sy said.

SM Prime is spending 3.58 billion renminbi (roughly P24 billion) for the construction of four new malls in China, scheduled for opening between 2010 and 2013. These include the group’s biggest shopping mall which will rise in Tianjin, the sixth largest city in mainland China.

When completed, these malls would bring SM Prime’s total store network in China to eight. SM Prime entered China in 2007 after buying the Sy family-owned malls in Xiamen, Jinjiang and Chengdu for $252 million.

The group is looking at Fuzhou, the capital of Fujian province in China, as future site for the expansion of its malls.

With China’s growing economy, SM Prime is targeting to open one mall annually beginning this year and accelerate this pace to as many as three yearly by 2013. China’s gross domestic product expanded 11.1 percent year-on-year in the first half of 2010. The Chinese government has set the annual economic growth target at around eight percent for this year.

On the homefront, SMDC is planning to launch 10 new projects, three of which are under its affordable housing brand Myplace.

As of end-September 2010, SMDC has 13 residential projects in the market.

Among its projects in the pipeline is Wind Residences, a nine-tower, 20-story condominium building in Tagaytay City with an estimated development cost of P12 billion. The project will offer a total of 7,758 units when completed in 2015. 

SMDC recently raised P11.7 billion from a stock rights offering of 1.83 billion shares.