ong with growth of more than 7 per cent last year. The new mall has four levels and more than 100,000sqm of gross floor area. It opened with a respectable 80 per cent of its leasable area already taken up with tenancies. SM City J Mall is anchored by retailers, including a hypermarket, that come under the corporate umbrella of sibling company SM Retail. The action is shifting to the regions SM Prime is committed to concentrating more resources in regional areas outside metropolitan Manila, where more than 40 per cent of the company’s mall floorspace already resides. The opportunity for regional growth in consumer spending comes partly as a result of government regional development programs, in much the same way as is occurring in Thailand (shifting economic development from Bangkok to the provincial capitals), Vietnam (emphasising growth outside of Ho Chi Minh City and Hanoi) and China (investing more in cities inland from the first-tier coastal metro areas). In the Philippines, SM Prime is well equipped to drive the development process because it develops its own ‘lifestyle cities’, or what it calls ‘integrated developments’ that include retail, residential, office, hotel, convention and entertainment uses. The retail operations are not just confined to malls but also incorporate custom-built high streets and markets. Eleven of these have already been developed in regional areas. The company’s mall portfolio itself now stands at 87 in the Philippines and eight in China, collectively bringing in $1.3 billion of revenue in 2023. The malls house more than 23,000 tenants. Revenue growth from SM Prime’s retail properties grew by 8 per cent year-over-year in the first half of 2024. This puts revenue on track to hit $1.4 billion in 2024. Most of this is rental income, which grew by 9 per cent in the first half. Sales growth, higher occupancy and new mall openings have all fed into the improvements in revenues. SM City J Mall is the second to open this year (the other was SM Caloocan in northern Manila) and the company also expects to open a third one, SM City Laoag in the northernmost tip of the country by the end of the year. In order to achieve its regional development strategy, SM Prime has amassed a huge landbank of 62 sites encompassing 360 hectares, of which the overwhelming majority is in the regions. This landbank should be sufficient to serve the company’s development plans for five to seven years. The symbiotic retail relationship SM Retail, the retail arm of SM Investments, operates a portfolio of more than 4200 stores across a whole plethora of retail categories that includes department stores, supermarkets, hypermarkets and specialty stores. In all the company runs 30 brands, and conveniently they rent space in SM Prime’s malls. (Similarly, SM Prime’s competitors in the Philippines, along with Central Group in Thailand and Vincom Retail in Vietnam operate extensive property and retail operations.) Gross revenues from retail operations increased by 4 per cent in the first half of the year, with food being the leading growth engine. Of the specialty categories, health and beauty sales increased by more than 15 per cent and fashion by 8 per cent. Sales are being juiced by a healthy economy and a vibrant loyalty program with 10 million members, about six million of which are active. The symbiotic relationship between the property and retail arms means that sales growth for SM Retail translates into rising rental income at SM Prime’s malls.  Food sales are done under five different formats: Savemore, SM Supermarket, SM Hypermarket, Waltermart and Alphamart. SM Retail is particularly optimistic about future growth in food retail since it believes that currently less than a third of food spending in the country is carried out in modern retail formats like supermarkets. The wet market still reigns supreme for the time being. Friendly competition from Robinsons and Ayala SM Prime is not alone in the Philippine mall and retail space, with competition coming from Robinsons Land and Ayala Malls. Robinsons’ 54 retail properties with 8,300 tenants generated 12 per cent revenue growth in the first half of the year. Rental revenues were up 14 per cent year-on-year. Unlike SM Prime, the vast majority of its assets (46 out of the 54) are outside metropolitan Manila. It also has a fat landbank for future development opportunities.  For its part, Ayala Land doesn’t report quarterly results but it is highly likely that its performance is mirroring that of SM and Robinsons Land. Its revenues last year skyrocketed by over 30 per cent and occupancy was a reasonably good 84 per cent at its more than two million square metres of leasable area in malls and high streets. Like SM Prime and Robinsons, Ayala has an outstanding track record developing huge and complex mixed-used projects, often sitting on former US military bases. Enviable economic backdrop The Philippines Statistics Authority reported GDP growth of 6.3 per cent in the second quarter, a further improvement on the 5.8 per cent growth in the first. Household consumption was the leading contributor to the demand side of the economy. Retail trade, in turn, has played an instrumental role in driving consumption growth. The unemployment rate is a healthy 4 per cent and here too, retail and wholesale trade are the leading engines of employment growth. The CPI has come down significantly throughout the year, to 1.9 per cent year-on-year in September.  All in all, the Philippine economy is in rude health, and with a sophisticated development and retail industry the stage is set for continued retail spending growth, which is increasingly diffusing away from Manila and into the regions.