MANILA, PHILIPPINES — November 10, 2026 — The Sy family’s property giant SM Prime Holdings is preparing another major wave of shopping mall, hotel and convention center investments despite a prolonged housing slowdown that has dragged down its earnings and left approximately ₱181.6 billion worth of residential inventory awaiting buyers.
The company reported ₱35.4 billion in consolidated net income for the first nine months of 2026, a 5% decline from ₱37.2 billion a year earlier.
Residential sales weakened sharply, but SM Prime’s malls continued attracting tenants and customers, while hotels and convention centers benefited from growing demand for tourism, dining and events.
That contrast is reshaping the company’s investment strategy.
According to InsiderPH’s November 9 report, SM Prime president Jeffrey Lim said the group would continue expanding but become more selective about which projects receive funding and when construction proceeds.
The company spent ₱44.4 billion in capital expenditures during the first nine months of 2026, down 25% from ₱59.3 billion a year earlier.
For 2027, management is considering spending of approximately ₱60 billion to ₱80 billion, with a possible upper limit of ₱100 billion, depending on market conditions and project priorities.
The company intends to prioritize shopping malls, hotel developments and convention centers while taking a more cautious approach toward new residential and office projects.
But as SM Prime continues building despite weaker homebuyer demand, a critical question is emerging: Can shopping malls and tourism generate enough growth to offset the residential slump—or could billions of pesos in unsold housing inventory continue weighing on the property giant?
SM Prime Reports ₱35.4-Billion Profit as Housing Weakens
SM Prime generated approximately ₱103.1 billion in consolidated revenue from January through September 2026, almost unchanged from ₱103.4 billion during the corresponding period last year.
But its net income declined 5% to ₱35.4 billion.
The pressure became more pronounced during the third quarter.
Profit fell 15% to approximately ₱10.9 billion, while quarterly revenue dropped 11% to ₱31.4 billion.
The company attributed much of the weakness to slower residential sales, buyer cancellations and delayed revenue recognition.
Higher borrowing costs, inflation and cautious household spending also made buyers more reluctant to commit to expensive property purchases.
The results reveal a major difference between SM Prime’s business segments.
Shopping malls and hospitality are performing well, while residential development remains under pressure.
For investors, the question is whether those stronger segments can continue expanding fast enough to offset weaker housing earnings.
Malls Become SM Prime’s Biggest Earnings Defense
SM Prime’s mall business remains the strongest contributor to consolidated revenue.
During the first nine months of 2026, mall revenue increased 10% to ₱63.7 billion, representing approximately 62% of total revenue.
InsiderPH separately reported that mall operating profit increased 16% to approximately ₱38.5 billion.
These figures measure different things: revenue reflects income generated by mall operations, while operating profit accounts for associated operating expenses.
Growth was supported by additional leasable space, higher tenant occupancy and continued demand for dining, entertainment and leisure offerings.
The trend illustrates why major Philippine developers are investing in more than conventional shopping.
Modern malls increasingly provide restaurants, sports facilities, concert venues, cinemas, wellness services and family attractions.
As previously reported by WWC ONE MEDIA, major Philippine property developers have announced a combined ₱184-billion pipeline involving 46 mall projects through 2030.
Related WWC ONE MEDIA coverage: Philippine Mall Giants Bet ₱184 Billion on 46 Projects as Pickleball Replaces Cinemas — But Will Shoppers Keep Coming?
That ₱184-billion figure covers a broader pipeline involving SM Prime, Ayala Land, Megaworld and Robinsons Land.
It is not SM Prime’s individual 2027 capital expenditure budget.
Hotels and Convention Centers Deliver Another Growth Opportunity
SM Prime is also increasing its emphasis on hospitality.
Revenue from hotels and its meetings, incentives, conventions and exhibitions business increased 7% to ₱6.4 billion during the first nine months of 2026.
The company attributed the improvement to stronger hotel bookings, higher average room rates and increased demand for events.
Management believes tourism and corporate gatherings provide opportunities for continued growth.
Unlike residential properties, where a developer may depend on large individual purchases, hotels and convention facilities can generate recurring income from guests and events.
However, hospitality is not immune to economic risks.
Occupancy, room rates, operating costs and travel demand can change as economic conditions evolve.
The strategy will therefore depend on maintaining attractive locations and consistently securing customers.
Concerts and Entertainment Are Becoming Big Business
SM Prime’s investments in live entertainment illustrate the changing role of its commercial properties.
Major venues such as the SM Mall of Asia Arena, SM Seaside Cebu Arena and SMDC Festival Grounds attracted more than one million visitors during the first eight months of 2026.
Attendance increased approximately 52% from a year earlier, according to the company’s earlier disclosures.
These events can also benefit nearby restaurants, hotels, retailers and transportation services.
As WWC ONE MEDIA previously examined, SM Prime’s entertainment facilities are becoming important traffic generators within its mixed-use developments.
Related WWC ONE MEDIA coverage: SM Prime Live Venues Top 1 Million Visitors as Concert Demand Surges — But the Bigger Business Is Happening Outside the Arena
The figures help explain why the company is maintaining investments in leisure and hospitality despite a difficult residential market.
A visitor attending a concert may also spend money on dining, shopping or accommodation.
The commercial opportunity extends beyond the event itself.
₱181.6 Billion in Housing Inventory Raises Concerns
The biggest challenge remains SM Prime’s residential business.
According to InsiderPH, the company’s estimated sales value of residential inventory increased 3% to ₱181.6 billion during the nine-month period.
That inventory includes completed and unfinished units still available for sale.
The number of unsold units nevertheless declined 5% to 25,914.
The combination suggests that the estimated sales value of remaining inventory increased even as the number of units fell.
However, those figures alone do not establish the precise reasons for the change, which could involve differences in project mix or unit values.
Importantly, the ₱181.6-billion figure is not a reported financial loss.
It is an estimate of potential sales value.
Still, a large inventory creates commercial pressure.
Developers must manage marketing, financing, construction schedules and customer demand while waiting for buyers.
Weak sales can also delay future cash collections.
Residential Revenue Drops 21% as Buyers Remain Cautious
SM Prime’s residential segment generated approximately ₱25.6 billion in revenue during the first nine months, down 21% from ₱32.6 billion a year earlier.
The broader real estate sales line declined 23% to ₱24 billion.
These are different reporting measures and should not be treated as interchangeable.
Residential operating profit fell 49% to approximately ₱6.6 billion, according to InsiderPH.
Third-quarter residential revenue also dropped sharply.
Management cited weaker buyer demand and the timing of revenue recognition.
Reservations, an indicator of prospective future sales, declined 10% to approximately ₱36.8 billion.
These figures indicate that the housing slowdown is affecting both recognized earnings and the pipeline of future revenue.
For developers, reservations can provide an early signal of demand, but they do not guarantee completed purchases.
Buyer cancellations, financing difficulties and construction schedules can affect eventual revenue.
SM Prime Becomes More Selective About Condominium Launches
Lim said the company intends to adopt a measured approach to new residential projects.
Rather than pushing ahead with every planned development, SM Prime will evaluate demand and market conditions more closely.
Premium residential projects are receiving greater attention because demand in that segment has held up better.
The company will remain more cautious about launches aimed at its core market until consumer confidence and buyer activity improve.
That does not mean residential development has stopped.
Existing projects continue progressing.
SM Development Corporation, the group’s residential business, has also been completing construction milestones in provincial developments.
As previously reported by WWC ONE MEDIA, SMDC’s Joy Residences project in Baliwag City, Bulacan, reached a topping-off milestone in October 2026.
Related WWC ONE MEDIA coverage: SMDC Joy Residences Reaches Topping-Off Milestone in Bulacan — But the Bigger Question Is When Homebuyers Can Finally Move In
A topping-off indicates structural construction progress, not final project completion or turnover to homebuyers.
The example shows that ongoing developments can continue even when a developer becomes more cautious about launching additional projects.
Office Expansion Goes on Hold as Occupancy Improves
SM Prime is also changing its approach to office properties.
Management said there are no new office launches planned for now.
Instead, the company will focus on completing existing buildings and increasing occupancy.
According to InsiderPH, occupancy improved to 79% from 73%.
That improvement can help support rental revenue from existing assets.
However, the figures also show that a portion of the company’s office space remains vacant.
Building additional office towers before demand strengthens could increase that exposure.
The company is therefore prioritizing leasing performance over aggressive expansion.
Office and warehouse revenues increased 10% to approximately ₱7.8 billion during the first nine months.
That indicates growth in the combined segment even as management remains cautious about starting more office developments.
SM Prime Cuts Capital Spending by 25%
SM Prime invested ₱44.4 billion between January and September 2026.
That was 25% below the ₱59.3 billion spent during the corresponding period last year.
The bulk of its spending supported ongoing mall and residential construction.
Other funds went toward commercial, integrated, hotel and convention projects.
The reduction reflects management’s effort to preserve financial flexibility.
Capital expenditure can support future growth, but large property projects may take years to generate returns.
Delaying projects with weaker demand can help avoid excessive spending.
At the same time, reducing investment too aggressively can slow future rental-income growth.
SM Prime must therefore maintain a balance between conserving cash and completing commercially attractive projects.
Why SM Prime Is Still Considering ₱100 Billion in 2027 Spending
Despite the lower nine-month spending figure, SM Prime is not planning to abandon major investment.
Lim said the company expects 2027 capital expenditure to remain broadly comparable with its planned 2026 spending.
He identified a possible range of approximately ₱60 billion to ₱80 billion, with a maximum of around ₱100 billion.
The higher figure represents a possible spending ceiling, not an unconditional commitment.
Management will adjust the timing of individual projects according to market conditions.
Mall developments and redevelopments will remain priorities.
Hotel and convention center projects are expected to proceed.
New residential launches will be more selective.
Office expansion will remain restrained.
The message is clear: SM Prime still wants to grow, but it intends to prioritize investments where demand appears strongest.
Rental Income Provides a Financial Cushion
SM Prime’s financial results demonstrate the importance of recurring income.
Rental income increased 8% to ₱66 billion, compared with ₱61 billion a year earlier.
That growth helped cushion the impact of weaker real estate sales.
Other revenues, including leisure, entertainment, hotel dining, advertising and sponsorship income, rose 17% to ₱13.1 billion.
Recurring rental income can provide greater stability than relying entirely on new property sales.
However, it remains vulnerable to changes in tenant demand, occupancy and lease conditions.
The stronger results do not eliminate the residential downturn.
They help explain why the company’s diversified portfolio has been able to remain profitable despite the slowdown.
Balance Sheet Remains Important as Expansion Continues
SM Prime ended September with approximately ₱1.1 trillion in total assets.
Cash and cash equivalents stood at ₱27.9 billion.
The company reported a net debt-to-equity ratio of 0.84 times and an interest coverage ratio of 7.3 times.
Those figures provide context for its financial position.
A substantial asset base can support investment, but it does not mean all assets are immediately available as cash.
Debt ratios and interest coverage are also important because property development requires long-term financing.
Management will need to ensure that capital spending remains consistent with expected cash flow and financial obligations.
The company remains profitable, and its commercial operations continue generating substantial revenue.
But its ability to manage investment through a prolonged residential slowdown will remain important for shareholders.
Provincial Expansion Remains Part of the SM Strategy
SM Prime’s expansion also fits the wider SM Group’s interest in regional growth.
Provincial economies offer opportunities involving retail, hotels, residential communities and mixed-use developments.
Investment decisions increasingly reflect local population growth, household spending and infrastructure availability.
As previously covered by WWC ONE MEDIA, SM Investments president Frederic DyBuncio has highlighted opportunities beyond Metro Manila.
Related WWC ONE MEDIA coverage: SM Investments Looks Beyond Metro Manila as DyBuncio Sees New Growth Opportunities Across the Philippines
The parent company’s regional outlook provides context for SM Prime’s property strategy.
However, identifying attractive provincial markets does not guarantee that every new development will be profitable.
Each project still requires adequate demand, appropriate financing and effective execution.
What Investors Should Watch in 2027
Several factors will determine whether SM Prime’s new strategy works.
The first is residential demand.
Investors will look for improvements in sales reservations, buyer cancellations and revenue recognition.
The second is mall performance.
Strong tenant occupancy and rental growth would help preserve recurring earnings.
The third is hospitality.
Higher hotel bookings, room rates and convention activity could provide another growth engine.
The fourth is capital discipline.
SM Prime must demonstrate that its investment decisions generate appropriate long-term returns.
Finally, shareholders will monitor whether the company can improve net income after its decline during the first nine months of 2026.
A large capital spending plan is not itself evidence of stronger earnings.
The real test is whether the completed projects attract enough customers and tenants to justify their costs.
The Bigger Picture: Can SM Prime Build Its Way Out of a Housing Slump?
SM Prime’s latest results reveal a company moving in two different directions.
Its residential business is under pressure.
Property sales have weakened.
Housing inventory remains substantial.
And consolidated profit has declined.
But its shopping malls are generating stronger revenue, while hotels, entertainment facilities and convention centers continue benefiting from consumer spending and tourism activity.
Management is responding by becoming more selective rather than abandoning expansion.
The company has reduced nine-month capital spending while maintaining the option of another major investment program in 2027.
That strategy could strengthen its portfolio if demand for malls and hospitality remains resilient.
But the company still needs a healthier residential market to support a broader earnings recovery.
For SM Prime, the challenge is no longer simply how many projects it can build. It is deciding which properties are most likely to attract customers, generate recurring income and deliver sustainable returns.
And as the Sy family’s property empire weighs another possible ₱100-billion investment program while ₱181.6 billion in residential inventory remains available for sale, one question will define its next chapter: Can thriving malls and hotels finally overcome the housing slump—or will cautious homebuyers continue holding back one of the Philippines’ largest property developers?
