SM Prime targets up to P100 billion capex in 2027, prioritising malls amid weak residential demand

SM Prime Holdings, Inc. is considering capital expenditures of up to P100 billion in 2027, with a focus on completing ongoing mall developments and redevelopments. The listed property developer reported a 14.8% decline in third-quarter net income to P10.9 billion, citing weak residential sales and e

SM PRIME Holdings, Inc. is considering capital expenditures (capex) of up to P100 billion in 2027, with the listed property developer prioritising ongoing mall developments and redevelopments amid weak residential demand and economic uncertainty.

“We remain confident in the long-term prospects of our portfolio, and we will continue to invest across all businesses. We expect capital spending in 2027 to be roughly in line with this year, around P60 billion, or P80-100 billion marks,” SM Prime President Jeffrey C. Lim said at a media briefing on Monday.

He said the company would be more selective in determining which projects to pursue next year, with priority given to ongoing mall developments and redevelopments. “However, we will be more selective about which projects to prioritise and when to proceed with them. For malls, our priority is to complete ongoing developments and redevelopments. We have several projects in the pipeline,” he said.

The spending outlook comes as SM Prime reported a 14.8% decline in third-quarter consolidated net income to P10.9 billion from P12.8 billion in the same period last year, amid weaker residential sales. Consolidated revenues for the three months ended September fell 11.3% to P31.4 billion from P35.4 billion a year earlier. Malls accounted for P21.9 billion in third-quarter revenues, while residential developments contributed P5 billion. Offices and warehouses generated P2.7 billion, while hotels and convention centres recorded P2 billion.

“Higher borrowing costs, elevated inflation and cautious consumer spending continued to weigh on residential demand. However, growth in our commercial and hospitality businesses helped keep revenues steady,” Mr. Lim said in a statement.

For the first nine months of 2026, SM Prime’s consolidated net income declined 4.8% to P35.4 billion from P37.2 billion in the same period last year, as weaker real estate sales offset gains in rental income and other revenues. Consolidated revenues slipped 0.3% to P103.1 billion from P103.4 billion a year earlier. Rental income rose 8.2% to P66 billion from P61 billion, while real estate sales declined 23.1% to P24 billion from P31.2 billion. Other revenues, comprising leisure, entertainment, hotel dining, advertising, and sponsorship income, increased 16.9% to P13.1 billion from P11.2 billion.

Malls accounted for the largest share of SM Prime’s consolidated revenues in the first nine months, contributing 62%, or P63.7 billion, up 10% from P58.2 billion a year earlier. Meanwhile, residential revenues declined 21% to P25.6 billion from P32.6 billion, reflecting slower revenue recognition and buyer backouts. Revenues from offices and warehouses rose 10% to P7.8 billion from P7 billion, supported by higher occupancy rates. The hospitality and meetings, incentives, conventions, and exhibitions segment generated P6.4 billion in revenues, up 7% from P6 billion, amid increased hotel bookings and demand for events.

SM Prime’s capital expenditures fell 25.1% to P44.4 billion in the first nine months from P59.3 billion a year earlier. The company said most of the spending went to ongoing mall and residential developments, with the remainder allocated to commercial, integrated, hotel, and convention centre projects. At the local bourse on Monday, shares in SM Prime fell 64 centavos, or 3.6%, to close at P17.16 apiece.