Shopping Centers Today International

FEB 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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Page 45 of 59

in part to the economic ties those areas enjoy with the U.S. Then, too, Latin America is rela- tively free of the political turmoil going on elsewhere in the world, observes Scott Harris, president of Global Know-Who, a U.S.-based retail real estate consulting firm. "The region is quite stable politically," Harris said. "The scourge of terrorism, which has resulted in sociopolitical and economic instability in Europe [and] the Middle East as well as in parts of Africa and Asia, does not seem to pose the same danger in Latin America." Other favor- able factors are a still comparatively low penetration rate of modern retail and the popularity of malls as community centers, Harris says. Global retailers and property investors are enthusiastic about Latin America, he notes. The continuing growth of Latin America's cities also bodes well for the retail industry, says Ramiro Alfaro, general manager of Spectrum, a Guate- malan real estate developer with malls in Guatemala, Honduras and Colom- bia. With the exception of Brazil and Venezuela, things seem to be good in the region, says Alfaro, who is looking ahead to expansion among domestic and international retailers alike. Even in Chile, Colombia and Peru, where growth has slowed, consumption is expected to remain healthy, thanks to stable income levels and employment rates, says David Mackinson, a senior analyst at Euromonitor International. "In those countries, access to credit aids in the purchase of perishable and durable goods," he said. Peru offers a particularly dramatic example of a dichotomy between eco- nomic and retail performance. That country's economy is estimated to have expanded by at most 3 percent last year, and yet combined sales at its nearly 80 malls were projected to be about $7.9 billion for 2015, up by 12 percent year on year. Peru's growing middle class continues to drive retail sales, particularly when it comes to electron- ics and appliances, notes José Antonio Contreras, president of that country's mall-trade group. He also points at the arrival of fast-fashion chains as a genera- tor of more mall visits and sales. The coming year will bring chal- lenges, to be sure. Colombia's currency has been hit hard by declining prices of crude oil, one of that country's main exports. Peru has presidential elections and the climatic impact of El Niño to contend with. "Many challenges are on their way, particularly tied to the eco- nomic stability of some countries and their impact on household consump- tion," said Carlos Hernán Betancourt, executive director of Acecolombia, Co- lombia's main mall trade group. "But it will be a year marked by the opening of new shopping centers across the region, as the entry of global brands continues to spur major developments." Three of the region's biggest coun- tries, Argentina, Brazil and Venezuela, face distinct issues that remove them from the growth radar for now. Follow- ing a 4 percent economic slide in 2014, Venezuela was headed for a nearly 7 percent contraction last year, accord- ing to the Economic Commission for Latin America and the Caribbean. On top of three-digit inflation, declining oil prices, a growing black market for U.S. dollars and an underperforming indus- trial sector, the mall and retail industries have been dealing with limited access to foreign currency to pay for imports. Last October the private sector was dealt another blow through a government de- cree establishing a maximum 30 percent profit margin over costs. Things look grim for Brazil too. Its economy was estimated to have shrunk by 2.9 percent last year, its largest drop in over a decade, a consequence of lower global prices for commodities, depressed private consumption and rising inflation and unemployment. Retail sales were "It will be a year marked by the opening of shopping centers across the region, as the entry of global brands spurs major developments." C E L E B R A T I N G H & M ' S A R R I V A L A T J o C E y P L A z A I N P E R u . L A T I N A M E R I C A I S G E T T I N G A L o T o F A T T E N T I o N F R o M I N T E R N A T I o N A L F A S T - F A S H I o N R E T A I L E R S . 46 S C T / F e b r u a r y 2 0 1 6

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