SMDC now ‘cautious’ on new developments

Published on Thursday, 08 November 2012 19:30

Written by Miguel R. Camus / Reporter

SM DEVELOPMENT Corp. (SMDC), one of the country’s most aggressive builders of residential condominiums, is turning “conservative” as it takes stock of its rapid growth in recent years amid uncertainties in the real- estate business, where some analysts are concerned about a supply-glut in certain market segments.  

Officials of SMDC and parent firm SM Investments Corp.  (SMIC) said the builder has been taking steps to address unseen risks moving forward in response to queries during SMIC’s quarterly briefing on Thursday.

“We are realistic with the situation, we have grown so fast. We will digest what we are doing,” SM Investments president Harley Sy told reporters when asked about his view on SMDC’s plans.

“It’s is a natural course—as in any business. We have to anticipate our own aggressiveness,” he added.

For her part, SMDC president Rosaline Qua said during the briefing that future project launches are “to be dovetailed with the inventory level.”

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“So we are balancing our inventory level from previous launches to current launches,” she said.

Qua added that SMDC has not launched projects in new sites this year, although the builder has rolled out add-on phases in existing areas.

“When the time is right, we are coming up with new projects but for the moment we are okay with our inventory,” Qua said.  

SMDC started to aggressively build up its portfolio in 2007. It is considered the country’s largest builder of residential condominiums, based on an earlier report by Colliers International Philippines.

SMDC has 14 condominium projects today, mainly targeting Metro Manila’s middle-income market. In terms of units, the company said it has built 48,892 units, of which 39,677 have been sold.

The queries on Thursday were prompted by SMDC’s lower-than-expected profit in the third quarter, meaning its nine-month net income growth slowed to 5.7 percent to P3.3 billion despite a 42.7-percent jump in revenues to P16.1 billion.

SMIC chief financial officer Jose Sio said the builder recognized higher costs during the period, including P300 million in provisioning for doubtful accounts,  expenses from relocating to a new and larger office and the acquisition of more raw land.

“Without these extraordinary expenses, net income would have increased by almost 20 percent,” Sio said.

Qua also noted that builders like SMDC also recognize earnings based on the level of completion of a given  project and some of these earnings were not booked during the quarter.