SM PRIME Holdings, Inc. is considering capital expenditures of up to P100 billion in 2027, with the listed property developer set to prioritize ongoing mall developments and redevelopments amid weak residential demand and broader 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.

Mr. Lim said the company would be more selective in determining which projects to pursue next year, with priority given to malls already under development or redevelopment.

“However, we will be more selective about which projects to prioritize 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 mall-first prioritization mirrors the company’s current revenue mix, with malls the largest earner and weaker residential sales the principal drag on profit this year.

Third-Quarter Results

The spending outlook was disclosed alongside earnings showing a 14.8% year-on-year decline in SM Prime’s third-quarter consolidated net income to P10.9 billion from P12.8 billion, driven by 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 generated P21.9 billion of third-quarter revenues, while residential developments contributed P5 billion. Offices and warehouses produced P2.7 billion, and hotels and convention centers 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.

Nine-Month Performance

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.

Rental income rose 8.2% to P66 billion from P61 billion, while real estate sales dropped 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 consolidated revenues in the first nine months, contributing 62%, or P63.7 billion, up 10% from P58.2 billion a year earlier. 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.

Capex and Share Price

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 center projects.

The distance between the two ends of the 2027 guidance — roughly P60 billion, matching this year, or as much as P100 billion — means the final outlay will depend on which pipeline projects proceed and when, the selectivity Mr. Lim described. For readers tracking the Philippine property sector, the pace of mall completions and the trajectory of residential demand are the near-term signals to watch as the company calibrates spending.

At the local bourse on Monday, shares in SM Prime fell 64 centavos, or 3.6%, to close at P17.16 apiece.

— Ashley Erika O. Jose, BusinessWorld

Source: BusinessWorld