operator as well as mall developer, they can drive their real estate growth by tenanting their malls with brands they own themselves. This differs from the typical American and European model where mall owners have to undertake lengthy negotiations with anchors and other key tenants before pushing ahead with projects. This is always a moving target because individual retailers want to be with others that complement them: Tenants B and C won’t come if Anchor A isn’t secured, and Tenant D won’t come if there is no Tenant C, and so on. If the developer can’t secure the right tenants in this negotiating environment, they won’t get the financing. On the other hand there is a downside to filling your malls with the same own-branded retailers as Central Group does in Thailand and SM Prime in the Philippines: It lends itself to more cookie-cutter projects than the US, where in the heyday of mall development, many companies thrived using different combinations of third-party tenants. (Consolidation of the industry altered the landscape and made it more homogeneous over time, but that is another story.) SM Prime sets a hectic pace of development In the Philippines, SM Prime opened three malls in the space of five weeks in the fourth quarter of last year alone, and now accounts for roughly half of all the country’s mall space. Its expansion program is now heavily geared towards the provinces and away from Metro Manila. This is consistent with mall expansions in Vietnam and Thailand, where the major metropolitan areas have been well established with mall footprints and the focus has shifted to secondary markets. In SM Prime’s case, more than 40 per cent of its portfolio is in Manila but 100 million Filipinos live in the provinces. The company has a landbank of 55 sites for malls covering a land area of 314 hectares, of which 93 per cent is outside Manila. That by itself should motor development well beyond the middle of the decade. On the near horizon are the three new malls opening in the Philippines this year, in Bataan, San Pedro and Sto. Tomas, along with five expansions of existing malls that will, collectively, add another 200,000sqm of gross floor area (GFA) to the company’s portfolio. In addition, SM Prime will open a mall in Yangzhou, China, its eighth in that country. Looking further ahead, ground has also just been broken on a forthcoming supermall to open in 2024 in Zamoanga, Mindanao. This comes atop a hectic spate of provincial openings toward the end of 2022, beginning with SM City Tanza on Friday, October 14, in Cavite, 50 kilometres south of Manila on Manila Bay. SM City Tanza has a gross floor area (GFA) of nearly 60,000sqm, including the usual SM Prime-operated supermarket and department store. Dining and entertainment back up the shopping. Two weeks later, the company opened SM City Sorsogon with 40,000sqm GFA. Sorsogon is located on the Bicol Peninsula a little over 500 kilometres southeast of Manila. On November 18, SM City Tuguegarao in Cagayan Province also threw open its doors. This one is in the opposite direction from Manila to the first two: it’s about 500 kilometres to the north. The mall has 62,000sqm of GFA and was 85 per cent leased at opening. SM City Tuguegarao was SM Prime’s 82nd mall in the Philippines and its 58th in the provinces, the remainder being in metro Manila. The company’s priority is to cover northern Luzon (the main island that includes Manila), the more advanced cities in the southern island of Mindanao, and the Visayas (central islands). From shoe shop to megaprojects SM Prime started out as a shoe store in Manila in the 1950s, but has grown into a formidable retail and mixed-use developer that builds malls and integrates them into commercial and residential projects that in many instances are former US military bases. The last of these was Subic Bay, a large naval base, 30 years ago. The projects built on former bases are financially enabled by public-private partnerships under the aegis of the Philippine government’s Bases Conversion and Development Authority. SM Prime has been a participant in 21 megaprojects in all, which it calls ‘lifestyle cities’, 11 in metro Manila and 11 more in large provincial cities. Its freestanding malls, such as those opened in October and November, have a collective gross floor area (GFA) amounting to 10.4 million sqm. The domestic malls have an impressive average daily pedestrian count of 2.9 million people. Thus, SM Prime’s revenues are derived not just from its mall business (although this accounts for just over 50 per cent of its turnover) but also from residential (high-rise, medium-rise and freestanding, about 40% of company revenues) and ‘other’ businesses, which include offices, hotels and convention centres (the remaining 10%). Bumper year ahead? For the full year 2022, total company revenues grew by 29 per cent but domestic mall revenue more than doubled. Including the seven China malls that had a more prolonged period of suffering from covid countermeasures, revenue was up 85 per cent.Growth in 2023 will be more subdued but, baring mishaps in the Philippine economy, still strong, as consumer spending continues to recover, tourism inflows increase, and the development pipeline remains robust.