SM Prime Hits Pause on Metro Manila Residential Launches

A Deliberate Retreat

SM Prime Holdings, the property arm of the SM Group and one of Southeast Asia's largest integrated developers, has shelved all new residential project launches in Metro Manila for the remainder of 2026. The decision marks a strategic pullback as the company navigates a cooling market and works through a substantial inventory pipeline.

"We're taking a deliberate approach with respect to residential," SM Prime executive vice president Cris Noel Torres said during a recent briefing. The company is now focused on gauging market reaction before committing to new supply, a shift from the aggressive expansion that defined the sector in prior years.

President Jeffrey Lim confirmed that no launches are planned for the capital region this year. The stance extends across both core and premium segments, reflecting broader caution among major Philippine developers as absorption rates slow and buyer sentiment weakens.

The Inventory Challenge

SM Prime is sitting on 29,791 unsold residential units with a total sales value of P200.4 billion, according to chief finance officer John Ong. The bulk of this inventory, roughly 87 percent, consists of units still under construction. Only 13 percent are ready-for-occupancy properties.

The company is now prioritizing the completion of ongoing developments, betting that finished units will move faster than pre-sold inventory. "We continue to see that RFOs tend to have a faster reservation take-up," Ong noted. The strategy aims to convert construction-in-progress into revenue more quickly, improving cash flow and reducing balance sheet exposure.

Residential revenues slipped one percent to P20.6 billion in the first half of 2026, down from P20.9 billion a year earlier. The decline was driven by lower revenue recognition from prior-year sales, a function of project completion timelines rather than new deal flow. Reservation sales, a forward-looking indicator, fell four percent year-on-year to P24.8 billion during the period.

Second-Half Targets

Despite the cautious posture, SM Prime is projecting a rebound in reservation sales for the second half. Lim said the company is targeting between P30 billion and P35 billion in new reservations, significantly above first-half levels. The guidance suggests the developer expects seasonal pickup and believes its inventory-clearing strategy will gain traction.

The company's residential portfolio spans economic housing to ultra-luxury offerings. Last year, SM Prime launched Signature Series by SM Residences, a premium brand aimed at high-net-worth buyers. The move completed the company's coverage across all market segments, though the current freeze on new launches indicates that even premium appetite has softened.

Regional Implications

The pullback at SM Prime reflects broader headwinds facing Philippine real estate. Interest rates remain elevated, construction costs have climbed, and household confidence has been uneven amid political and economic uncertainty. Developers across Manila have slowed new supply, wary of oversupply risk in a market where absorption has lagged pipeline growth.

The Philippines has been a bright spot in Southeast Asian property markets over the past decade, fueled by remittances, a young demographic, and urbanization. But the current pause suggests that even resilient markets face limits when financing conditions tighten and affordability erodes.

For investors tracking regional property cycles, SM Prime's inventory strategy offers a case study in capital discipline. The company is choosing to de-risk rather than chase volume, a shift that may define the sector's next phase across ASEAN markets where inventory overhang is rising.