SM Prime profit slips as real estate sales slump

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November 10, 2026 | 12:00am

MANILA, Philippines — SM Prime Holdings Inc. of the Sy family plans to remain deliberate in its capital spending next year, as weaker real estate sales amid higher borrowing costs, elevated inflation and cautious consumer spending weighed on its earnings in the first nine months.

In an online media briefing yesterday, SM Prime president Jeffrey Lim said the integrated property developer remains confident in the long-term prospects of its portfolio and it will continue to invest across all businesses.

“We expect capital spending in 2027 to be roughly in line with this year, around P60 billion to P80 billion to P100 billion max. However, we will be more selective about which project to prioritize and when to proceed with them,” he said.

For malls, Lim said the group’s priority is to complete ongoing developments and redevelopments.

“We have several projects in the pipeline, but we may adjust their timeliness depending on market conditions,” he said.

Lim said SM Prime’s hotel and convention center projects, on the other hand, would proceed as planned, having the financial capacity to fund these investments and the company continuing to see good opportunities in tourism, meetings and conventions.

For residential developments, Lim said the company would take a more measured approach to new launches.

“Demand has been relatively stronger in the premium market, so that is where we see better opportunities for now. We’ll be more cautious about launching projects in the core segment until buyer take-up and sentiments improve,” he said.

Lim said there are no plans for new launches in the office segment at this point.

Instead, SM Prime will focus on completing projects already underway and improving occupancy across existing portfolios.

“So we are not putting out our expansion plans on hold. We are simply being more deliberate about how we spend, and we will focus on projects with stronger demand, while keeping the flexibility to adjust our plans as market conditions evolve,” Lim said.

SM Prime’s net income slipped by five percent to P35.4 billion during the nine-month period from P37.2 billion last year as weaker real estate sales offset gains in rental income and other revenues.

Rent income improved by eight percent to P66 billion from P61 billion, while real estate sales fell by 23 percent to P24 billion from P31.2 billion.

Other revenues, comprising leisure, entertainment, hotel dining, advertising and sponsorship income, jumped by 17 percent to P13.1 billion from P11.2 billion.

For the third quarter alone, SM Prime reported a consolidated net income of P10.9 billion,15 percent lower than P12.8 billion last year.

Lim said growth in commercial and hospitality businesses helped keep revenues steady and the company’s focus on managing costs helped ease the pressure on earnings.

The company generated consolidated revenues of P103.1 billion from January to September, almost unchanged from P103.4 billion recorded a year earlier.

Malls had the biggest share of total revenues at 62 percent, up by 10 percent year-on-year to P63.7 billion, driven by additional leasable space, higher tenant occupancy and strong demand for dining and experiential offerings.

The residential segment, comprising core, leisure and premium projects, accounted for 25 percent of total revenues.

The segment’s revenues declined by 21 percent year-on-year to P25.6 billion as a result of slower revenue recognition and buyer backouts.

Revenues from offices and warehouses, which accounted for eight percent of total revenues, climbed 10 percent to P7.8 billion, supported by higher occupancy rates.

The hospitality and MICE segment contributed six percent of consolidated revenues, improving by seven percent to P6.4 billion, as increased hotel bookings, higher average room rates and stronger demand for meetings, conventions and events lifted revenues.

Lim said that while 2026 has been a very challenging year, SM Prime continues to see pockets of growth across the group despite headwinds.

He said its commercial properties continue to perform well, helping the company sustain healthy margins, profitability and cash flow.