The following is a study of one sector of the economy nowadays in Latin America that has been thriving lately with the proliferation of indoor malls and expansion of big players who are the ones mostly responsible for making it happened. In fact, Latin America today accrues commercial property values that reach over $ 1.5 trillion with countries like Brazil, Mexico, Chile, Peru and Panama having a matured industry for the development of indoor malls. Brazil, Mexico, Chile and Peru in particular have witnessed a rapid proliferation of indoor malls backed by strong industry players with some of them currently being multinationals in their own right. By the same token, I think is also helpful for me to divide the industry according to size in similar fashion like I did with banks in terms of emerging and matured industries by country. Accordingly, after having done research on it, I came up with the idea of designating an emerging mall industry in a country if the nation possesses substantially less than one million square feet or 100 thousand square meters of gross leasable area comprised in indoor malls per one million inhabitants. Likewise, a matured mall industry is where the country possesses more than one million square feet or 100 thousand square meters of gross leasable area comprised in indoor malls per one million inhabitants. Moreover, although we all know that Brazil is experiencing its worst economic contraction right now since the “Great Depression” where one fifth or the equivalent of $ 200 billion worth of stock market wealth was suddenly in a matter of less than two years evaporated from its main stock exchange known as the BM&F Bovespa, the country and the region as a whole maintain robust domestic consumer spending from an economic output of around $ 4.5 trillion a year today but close to $ 8 trillion annually, when adjusted for purchasing power parity or PPP, which translates into lucrative opportunities to meet growing demand for the shopping experience in indoor malls.
Brazil: the country has a matured mall industry. Although fairly fragmented, seven developers alone are responsible for over half the market in Brazil. These developers are BR Malls S.A., Multiplan Empreendimentos Imobiliarios S.A., Iguatemi Empresa de Shopping Centers S.A., Aliansce Shopping Centers S.A., Cyrela Commercial Properties S.A., João Fortes Engenharia S.A. and Companhia Zaffari Comércio e Indústria Limitada. Moreover, BR Malls is widely-held and trades in Brazil whereas Aliansce Shopping Centers represents a foreign direct investment in a company that trades in Brazil while being controlled by a powerful American real estate investment trust known as General Growth Properties Corporation. The Iguatemi Empresa de Shopping Centers trades in Brazil as well and is controlled by Jeiressati Participações S.A.. The latter is in turn a holding company listed in Brazil and controlled by prominent Brazilian entrepreneur Carlos Francisco Ribeiro Jereissati. Similarly, Multiplan Empreedimentos Imobiliarios went public in Brazil recently and is controlled by Brazilian businessman José Isaac Peres. In addition, Cyrela Commercial Properties trades in Brazil and over-the-counter in the US as an ADR while controlled by prominent local tycoon in Brazil Elie Horn. João Fortes Engenharia S.A., on the other hand, participates in residential real estate development, trades in Brazil and is controlled by active Brazilian investor Antônio José Carneiro. Likewise, Companhia Zaffari Comércio e Indústria Limitada specializes in the retail sector through supermarkets and hypermarkets in the State of São Paulo and the South Region of Brazil while developing and operating indoor malls on the side. The company was founded in 1935 by the late Francisco José Zaffari with the help of his wife then and today descendants of the couple are a tight-knit family who remain low-profile owners of the company in full. Altogether, these seven mall developers hold over 120 indoor malls between them comprising over half the market in Brazil. Nevertheless, the biggest indoor mall in Brazil located in Greater São Paulo containing 247 thousand square meters of gross leasable area and known “Centro Comercial Arincaduva” does not belong to any of them.
Mexico: the country has a matured mall industry and is heavily concentrated. Three builders alone by themselves comprise two thirds of the the market. These builders are Fibra Uno Administración S.A. de C.V., the mall division of the Mexican department store chain known as El Puerto de Liverpool S.A.B. de C.V. and Carlos Slim Helú through his publicly-traded real estate arm known as Inmuebles Carso S.A.B. de C.V. Fibra Uno is by far the biggest player of them all in Mexico and the biggest real estate investment trust regionwide after owning and operating some 50 indoor mall properties occupying a staggering total extension of approximately two million square meters of gross leasing area comprising its finished indoor malls only while having around 20 more under construction presently. Altogether, the giant Mexican REIT participates in the whole spectrum of commercial real estate including retail, office, hotel and industrial properties. In addition, the REIT was established relatively recent in 2010 and is controlled through super-voting common stock by the El-Mann Arazi brothers, Abude Attie Dayan and Isidoro Attie Laniado, the three of them Mexican nationals holding a combined 26% economic interest in the company. El Puerto de Liverpool, on the other hand, owns and operates around 20 indoor malls and has 10 more under construction nationwide whereas Carlos Slim Helú controls in turn 10 properties while having around 10 more under construction today in Mexico including the vast museum, theater, retail, office and residential mixed-use ongoing development known as “Plaza Carso” located in the attractive Nuevo Polanco neighborhood of the Mexican capital. This development accounts for an initial investment amounting to $ 800 million coming from the pockets of Inmuebles Carso completely. Overall, these three builders currently own and operate over 80 indoor malls of at least 40 thousand square meters each between them throughout the Mexican landscape. Moreover, the biggest indoor mall in Mexico containing 210 thousand square meters of gross leasing area is known as “Centro Santa Fe”. The latter has the same name of its counterpart in Colombia and is located in Mexico City while belonging to El Puerto de Liverpool.
Chile: the country has a matured mall industry and is fairly concentrated. Mayor builders responsible for at least half the market are the mall divisions of Chilean retailers Cencosud S.A., S.A.C.I. Falabella and Wal-Mart de Chile S.A. Moreover, there is also a business venture belonging to high-profile Chilean billionaire Álvaro Saieh Bendeck known as “Malls Vivo” and a multinational mall developer listed in Chile known as Parque Arauco S.A. holding the remaining half of the Chilean market between the two of them. The latter is controlled by Chilean businessman José Said Saffie. Altogether, there are at least 60 indoor malls of at least 40 thousand square meters of gross leasable area each operating inside the republic including the newly built massive development belonging to industry titan Cencosud comprising retail, office and hotel properties in Greater Santiago known as “Costanera Center”. The latter contains the tallest skyscraper in Latin America as well as the biggest indoor mall in Chile under its roof.
Peru: the country has a matured mall industry and is fairly fragmented. Mayor builders comprising around a quarter of the market include the mall divisions of Chilean retailers Cencosud S.A. and S.A.C.I. Falabella. Likewise, Chilean mall developer Parque Arauco S.A. is also present being the industry leader there along with the mall division of Intercorp controlled by Peruvian billionaire Carlos Rodríguez-Pastor. The former owns and operates 18 properties in Peru while the latter owns and operates 13 indoor malls throughout the nation. Moreover, the Romero clan is present in this sector in Peru through control of a publicly-traded concern known as Inversiones Centenario S.A.A. and the Brescia clan is active in this sector nationwide as well through Urbanova Inmobiliaria S.A.C. belonging in its entirety to their privately-held holding company known as Inversiones Breca S.A. In addition, the Wiese family has a strong presence in this sector in Peru also through their wholly-owned commercial real estate arm known as Holding Plaza S.A. owning and operating 9 finished indoor malls while having another 6 under construction. Overall, the country possesses more than 60 indoor malls of at least 40 thousand square meters of gross leasable area each including the biggest of them all known as “Jockley Plaza” located in Greater Lima and belonging to Chilean department store titan Falabella.
Central America: except for Panama, the subregion has an emerging mall industry and is fairly concentrated. In fact, Panama is dominated by the real estate juggernaut known as Grupo Los Pueblos S.A. having built the biggest indoor mall in Latin America containing an impressive 380 thousand square meters of gross leasable area known as “Albrook Mall” and located on the outskirts of Panama City. The latter is owned completely by growing Panamanian developer Mayor Alfredo Alemán. Guatemala, on the other hand, is dominated by the real estate division of the conglomerate and national champion known as Corporación Multi-Inversiones S.A. which holds 12 properties in its portfolio operating nationally. The latter is wholly-owned by the related first cousins consisting of the Gutiérrez Mayorga brothers and the Bosch Gutiérrez brothers. All of them are grandsons of the late Don Juan Bautista Gutiérrez Blanco, a Spanish immigrant in Guatemala and patriarch of the low-profile business dynasty who founded the thriving privately-held conglomerate mentioned just earlier. The rest of the region is dominated by the real estate goliath known as Grupo Roble S.A. which belongs in its entirety to one of Central America’s richest men from El Salvador and jet setting philanthropist Ricardo Poma. The Salvadoran real estate group develops office properties, is active in residential real estate development and owns 19 indoor malls operating across the subcontinent. In addition, Almacenes Simán S.A. de C.V., Grupo Agrisal S.A. de C.V. and Spectrum Inmobiliaria S.A. are also active in this sector throughout the region. The first two are Salvadoran concerns and the latter one mentioned is a Guatemalan developer owned in its entirety by prominent sugar baron in Guatemala Julio Herrera Zabala.
Ecuador: the country has an emerging mall industry and is heavily concentrated. In fact, the country is dominated by only one developer being the mall division of conglomerate and national champion Corporación Favorita C.A. which holds 13 properties in its portfolio operating nationally.
Venezuela: the country has an emerging mall industry and is fairly concentrated. Two builders alone by themselves comprise at least a quarter of the market nationwide which are the privately-held builder known as Constructora Sambil C.A. and the office, hotel, retail and residential listed Venezuelan developer known as Fondo de Valores Inmobiliarios S.A.C.A. These two companies own 16 properties of at least 40 thousand square meters of gross leasable area each between them across the country. In fact, having gone abroad after doing strategic investments, they happen to be multinationals in their own right with Fondo de Valores Inmobiliarios counting on American moguls George Soros and Sam Zell as strategic venture partners. Nevertheless, there is at least one newly established competitor besides Grupo Mantex S.A.C.A. and Grupo Sigo S.A. who just recently built a massive property in Caracas known as the “Millennium Mall” competing while gaining ground from the likes of “Centro Sambil Caracas” which is the fourth biggest indoor mall in Latin America containing 250 thousand square meters of gross leasable area.
Colombia: the country has an emerging mall industry and is fairly fragmented. Two national builders alone by themselves control about a fifth of the market after owning three properties each which are Constructora Colpatria S.A. and Construcciones Planificadas S.A. The former is owned completely by the Pacheco family whereas the latter belongs in its entirety to Colombian billionaire banker Luis Carlos Sarmiento Angulo, both are privately-held. Other concerns operating inside the republic accounting for a good size of the market are the mall division of the Chilean retailer known as S.A.C.I. Falabella, Parque Arauco S.A. and the Salvadoran Grupo Roble S.A. being present as well after owning one property to be opened in early 2017. In addition, Constructora Colpatria and Construcciones Planificadas own the third and second biggest indoor malls in Latin America known as “Centro Comercial Santa Fe” and “Centro Mayor” in Bogotá containing 250 and 280 thousand square meters of gross leasable area respectively. Furthermore, the biggest builder in the country in terms of number of malls and accounting for at least a quarter of the market is a business venture controlled by the country’s biggest retailer known as Almacenes Éxito S.A. This business venture is known as “Viva Malls” and holds in its portfolio 13 properties as well as another 7 under construction currently with a combined gross leasable area that exceeds 500 thousand square meters comprising its finished indoor malls only.
Argentina: the country has an emerging mall industry and is fairly concentrated. Three developers alone by themselves control at least half the market in Argentina. These developers are the mall division of Chilean retailer Cencosud S.A., the mall division of the country’s biggest domestic-based grocer as well as red meat wholesaler known as Coto C.I.C.S.A. and the massive retail, office, hotel and residential real estate holding trading in Argentina and here in America, as an ADR on the NYSE under the ticker symbol (IRS), known as Inversiones y Representaciones S.A. or IRSA. Moreover, IRSA is one of the country’s blue chips listed in Buenos Aires and likewise the developer is also a constituent of the Argentine stock market index known as MERVAL. In addition, the company is controlled by prominent Argentine developer and Jewish activist Eduardo Elsztain who contributes handsomely to Jewish causes around the world counting on fellow Jewish philanthropist George Soros as a minority investor in the publicly-traded and booming real estate holding he controls with his two brothers. Nevertheless, the biggest indoor mall in Argentina containing around 200 thousand square meters of gross leasable area and located in Greater Buenos Aires known as “Unicenter” belongs to Chilean retail colossus Cencosud S.A. Overall, between the three of them, they own and operate about 20 properties in Argentina with IRSA holding the lions’ share of the three with 12 indoor malls in operation under its wings.