SM Prime Holdings Inc., one of Southeast Asia’s largest integrated property developers, is marking its 30th anniversary with a bold new strategy to reshape its residential offerings and cater to evolving market dynamics.
As demand for affordable and middle-income housing shows signs of continued slowdown, SM Prime is shifting its focus to premium and integrated developments that promise to drive long-term growth and diversify its portfolio.
The company’s decision to realign its residential business comes at a time when the Philippine property market is grappling with a slowdown in demand for affordable and middle-income homes due to prevailing high interest-rate environment.
Luxury market
Real estate expert David Leechiu expects SM Residences, which will hold all residential brands of the group, to become a major player in the high-end residential market.
“The brisk take-up and record prices of The Estate has proven that SM can deliver in the premium segment. I expect them to be a dominant force in the segment that only three to four players participate in,”Leechiu said.
While SM Group’s residential unit SM Development Corp. has been known for residential development catering to middle-income market, Leechiu said SM also developed several high-end malls and hotels like SM Aura and Podium as well as Conrad Hotel and City of Dreams.
“They have proven they can do high-end projects. They can compete and rival existing high-end horizontal developers,” Leechiu said.
Joint venture
Colliers Philippines research director Joey Bondoc said SM Group’s move to expand its residential offering is a step in the right direction because the luxury market has been a bright spot in the residential sector.
He noted that of the total unsold ready for occupancy units in the market, only 5 percent is coming from the luxury and upscale market, while 57 percent is from the mid-income market.
To lure the meticulous ultra-rich market, one strategy that SM Residences can adopt, said Bondoc, is to forge joint venture partnerships with known high-end developers.
The strategy was also adopted by other developers like Robinsons Land Corp., which teamed up with Shang Properties and Hongkong Land and Federal Land Inc. which worked with Japanese property developer Nomura Real Estate Development Co. for their high-end projects.
Bondoc also said SM Residences could also incorporate various in-demand features in their high-end horizontal developments like golf course to attract their target market.
Premium offering
SM Residences’ premium offering is poised to make a strong debut in early 2025. For its initial salvo, it plans to launch a 200-hectare development with additional projects in the pipeline ranging, from P25 million to over P100 million in value.
“We are entering an exciting phase as we turn 30, and we are committed to leveraging our extensive land bank to further expand our presence in high-growth sectors, including premium and integrated developments,” said Jeffrey Lim, president of SM Prime.
“The realignment of our residential projects under SM Residences will allow us to address the full spectrum of housing demand while continuing to contribute to the government’s goal of solving the housing backlog,” he said.
