SM Prime’s 25 Billion Peso Reclamation Project: A Strategic Bet on Manila’s Future

SM Prime Holdings Inc. is doubling down on its vision for Manila’s urban future with a ₱25 billion investment this year to advance its 360-hectare reclamation project in Pasay City, dubbed Pasay 360. This massive mixed-use development—equivalent to five Mall of Asia complexes—aims to transform a coastal area into a climate-resilient, smart-city hub blending commerce, tourism, and residential spaces. As the project nears critical milestones, investors are taking note of its potential to redefine Manila’s economic landscape while testing SM Prime’s ability to execute large-scale infrastructure ventures.

The Project’s Ambitious Scope

Pasay 360 is no ordinary real estate play. The 360-hectare project, a joint venture with the Pasay City government, will feature offices, luxury residences, a five-star hotel, an entertainment arena, a convention center, hospitals, schools, universities, and a museum. Crucially, it will connect seamlessly to the existing Mall of Asia complex, creating a contiguous 420-hectare economic powerhouse. The development emphasizes climate resilience—elevated structures, advanced drainage systems, and smart-city technology—to future-proof against rising sea levels and extreme weather.

Funding and Financial Momentum

The ₱25 billion allocated for 2025 represents a chunk of SM Prime’s ₱100 billion total expansion budget this year, with ₱67 billion targeting residential and integrated developments and ₱21 billion earmarked for mall expansions. While the company postponed its real estate investment trust (REIT) listing due to uncertain market conditions, CEO Jeffrey Lim reassured investors that debt financing remains accessible. SM Prime’s first-quarter 2025 results underscore its financial strength: net profit rose 11% year-on-year to ₱11.7 billion, with malls contributing 69% of earnings.

The stock’s steady rise aligns with the company’s expansion trajectory, though volatility may persist amid infrastructure execution risks.

Timeline and Execution Risks

The project’s timeline hinges on completing sand-filling operations by end-2025, a milestone that would clear the way for horizontal development—roads, utilities, and buildings—to begin in 2026. Final handover of the reclaimed land to the government is slated for 2028, a deadline SM Prime aims to meet despite past delays in similar projects.

Key challenges remain:
- Regulatory and titling processes: Land documentation must proceed smoothly to avoid bottlenecks.
- Market demand: Luxury residences and offices require sustained economic growth to attract buyers and tenants.
- Environmental scrutiny: Critics argue reclamation projects can disrupt marine ecosystems, though SM Prime’s climate-resilient design attempts to mitigate this.

Strategic Rationale and Investor Appeal

For SM Prime, Pasay 360 is a bet on Manila’s urbanization boom. By 2028, the project could add 20% to Pasay City’s land area, creating jobs and tax revenue while reducing overcrowding in existing CBDs like Makati. The integration of residential, commercial, and cultural spaces positions the development as a “live-work-play” destination, appealing to millennials and foreign investors alike.

Crucially, the project aligns with the Philippine government’s push for infrastructure modernization. SM Prime’s track record—including the successful Mall of Asia—bolsters confidence, as does its partnership with engineering firm AECOM, which designed the master plan.

Conclusion: A High-Reward, High-Risk Venture

SM Prime’s ₱25 billion reclamation project is a defining moment for the company’s growth strategy. With 60% of land reclamation already complete and a clear timeline through 2028, the project’s success could unlock ₱150 billion in total value, cementing SM Prime’s leadership in integrated property development.

Investors should weigh its risks—execution delays, market softness, or regulatory hurdles—against its transformative potential. The 11% profit growth in Q1 2025 and the company’s access to debt markets suggest financial resilience, while the 360-hectare scale and smart-city design position Pasay 360 as a future-proof asset.

For now, the project reflects SM Prime’s confidence in the Philippine economy’s recovery and its ambition to shape Manila’s skyline. As bulldozers carve the shoreline into a modern metropolis, investors are watching closely to see if this gamble pays off.