Latin American market boomingDigital Manager
Whilst the global trend within the shopping centre development pipeline remains positive, and there is significant growth in many emerging markets monitored at Innesco – none more so than in Latin America.
The middle class in Latin America is growing exponentially, and so is the demand for modern retail. According to Shopping Centres Today, sales within the region have more than doubled in the past decade -from $420 billion (2003) to $1 trillion (2013) – and this trend is expected to continue.
Between Colombia, Brazil and Chile there are around 70 new malls in the pipeline to be built, while Peru will increase the number of malls from 60 to 100 within the next four years.
Latin Americans are also becoming increasingly urbanised, with thepercentage of consumers living in these areas set to grow from 55% to 80% by 2018. Cities such as Bogotá, Lima, Mexico City and Rio de Janeiro are all expected to become “megacities” with at least 10 million inhabitants by 2025. This is a sobering thought considering London has around 8.3 million inhabitants.
This doesn’t come as a surprise, since Latin America has one of the youngest populations, meaning a more dynamic consumer who continually searches for the next best innovation. In addition, an expected rise in disposable income makes this market even more appealing for retail property investment and development.
Italian fast-fashion OVS, amongst a host of other retailers, has seen this opportunity and has already started to expand to Latin America opening its first store in Costa Rica in December 2013. But it didn’t expect to be such a resounding success among the consumers, “we sold double the amount we had estimated, and all based on word of mouth” explained Gabriel Tomasin from Gruppo Coin. OVS is planning to expand in bigger markets like Mexico and Peru, as is the American giant Forever 21.
There are also local retailers that are benefiting from the growing market, such as the Colombian retailer Tennis, who has been successfully outsourcing via franchises and is subsequently active in seven other Latin American countries.
Although there are many shopping mall developments in the pipeline, and both local and international retailers are expanding in the region, it will be interesting to see how existing shopping centres themselves deal with the pressure of gaining and retaining shoppers. Increasingly, it’s not merely the retailers on offer that are important to consumers – the shopping centre brand itself must prove to be magnetic.
We can see from the recent acquisition of 36% of Iguatemi in São Paulo by TIAA-CREF that the market is really becoming front of mind for global players. Westfield’s dissolution of its JV with Almeida Junior last year is almost a distant memory, but many expect the global leader in shopping malls to return to the market soon.
Claudia Kauert, International Executive