The Philippines’ biggest shopping mall owner and operator set its spending tack for its foray into China as part of its expansion across Asia, officials announced Thursday.

SM Prime Holdings Inc. (SMPH), the shopping mall development arm of the Sy group, is spending P1 billion for the construction of its fourth mall in China later this year.  

At the sidelines of the company’s annual stockholders meeting Thursday, president Hans T. The mall will be located in Chongqing, southwest China’s commercial capital.  

 “The mall will have a gross floor area of 140,000 square meters and is up for completion by 2010,” Sy said.

the cost of building a mall in the mainland half the size of SM Megamall is around P1 billion. Megamall in Mandaluyong City has a GFA of at least 300,000 sq m.  

The SMPH executive said prospects for its future mall in Chongqing is good since the city has at least 35 million people, 2 million of which are located within the new property development where the SM mall will rise. 

As a vote of confidence in its China business, SMPH will also embark on an expansion program for SM Xiamen that will add 90,000 sq. m. of GFA to its present 126,000 sq. m.  

SMPH has three existing malls in the southern and western parts of China, namely, Xiamen, Jinjiang and Chengdu.
The mall in Xiamen was the first to open in December 2001. It has a gross floor area (GFA) of 126,000 square meters (sq m), almost similar in size to SM City Santa Mesa and is 100-percent occupied. 

SM Jinjiang opened in November 2005 with a GFA of 170,000 sq m and occupancy of 74 percent. 

Opened last year was SM Chengdu with a GFA of 170,000 sq m and a 71-percent occupancy rate. 

 “China is still a relatively new area for us and we will remain conservative in our approach when it comes to investing there,” Sy said. “We will carefully study the business risks in each area we penetrate. This continues to be our policy even as we open new malls in the Philippines where we are expected to already know the market pretty well.” 

In the next five years, SMPH plans to build three to four additional malls in China as part of its long-term growth strategy.

SMPH reported a net income of P5.97 billion in 2007 and said the acquisition will allow them to gain a foothold in China’s fast-growing economy and use this as a platform for long-term growth outside of the Philippines, where it is already the most dominant player. 

We will expand but we have to build the brand name first,” Sy said.  Plans for another mall in Vietnam is still being studied and the SMPH president said they are “looking in the Asian region but nothing is concrete yet.” 

After the company opened the Mall of Asia two years ago, the third biggest mall in the world, the SM group received offers to build new shopping destinations in Vietnam and India, SMPH earlier said.  

For this year, the company is spending P6 billion to open new malls which include SM Marikina, SM City Baliuag and SM Supercenter Rosales in Pangasinan. 

Also underway are the expansion of SM Megamall,  SM City Fairview and SM North Edsa, all slated for completion in 2009. SM Marikina will provide an additional (122,000 sqm) of gross leasable space, SM Rosales (31,000 sqm) and SM Baliuag (61,000 sqm). 

The company expects to end the year with a total of 33 malls with a gross floor area of 4.2 million sqm from 3.9 million sqm in end-December 2007.