XIAMEN, China — SM Prime Holdings Inc., one of Southeast Asia’s largest integrated property developers, is investing ₱1.5 billion to expand its flagship mainland China development with a new retail and lifestyle concept targeting younger consumers.

Jeffrey C. Lim, SM Prime president, said the company is constructing the CHAO Block, a 19,403-square-meter development envisioned as a “neo-urban block” that moves away from traditional shopping mall design.

The expansion, Lim said, aligns with SM Prime’s goal to adapt to changing consumer habits in China's highly competitive retail market.

The name “CHAO” is inspired by a theoretical fourth state of water beyond liquid, solid, and gas, which SM Prime says represents openness and fluid commerce.

“Hopefully, that will create excitement. It’s a new concept for entrepreneurs,” Lim said, noting that portions of the block could eventually shift to a 24-hour operational schedule. “For the CHAO Block, that's one of the goals. To extend our operational hours from breakfast, to brunch, to afternoon, to dinner, until late-night snacks.”

The project will be rolled out in two distinct stages, with the first phase of the CHAO Block scheduled to open in September 2026. The second phase is slated for completion in the fourth quarter of 2027. Instead of standard corporate retail leases, the developer intends to fill the space with independent business founders, local entrepreneurs, cultural curators, and first-to-market brands, requiring tenants to use their storefronts for community events, product launches, workshops, and art exhibitions.

The capital expenditure comes 25 years after the Philippine conglomerate first gained a foothold in mainland China through the original SM Xiamen development. SM Prime has aggressively scaled the complex over the last two decades, building out three distinct retail phases alongside a new upscale hotel and five commercial office towers.

“SM Xiamen City holds a distinct place in our company’s history,” Lim said. “Being our first overseas investment, it has served as a long-term platform for learning, expansion, and growth in China. As Xiamen continues to develop, we intend to keep strengthening the property and the local entrepreneurs so it remains an important part of the city’s commercial landscape.”

First established in 2001 to capture mainstream Chinese consumers, the Xiamen complex has undergone multiple iterations to defend its market share against digital e-commerce and newer luxury developments. SM Prime added 109,922 square meters of gross floor area in 2009 to transition the site into an upscale lifestyle hub, followed by an additional 129,195 square meters in 2022 focused heavily on social and experiential spaces.

The megamall asset currently anchors more than 500 stores, counting global brands such as Apple Inc., Sephora, Maison Le Fame, and Lululemon Athletica Inc. alongside a Walmart Inc. hypermarket.

“China’s commercial real estate market is highly competitive, but the support of our tenants and customers has kept SM Xiamen City relevant,” Lim said. “As we mark our 25th anniversary, we look forward to bringing a new commercial format to the next wave of consumers, entrepreneurs, and brands.”