Building Latin America: What Opportunities Developers Must Look Into

“The growing middle class in Latin America needs services that may differ from what the more affluent communities enjoy, but many foreign investors are not even targeting the A- to C- market segments,” according to Fernando Teruya, Founder & President, FTA Design Studio, Inc. “New infrastructure and property developments must appeal to them – this is where the new opportunities are. Some communities located between the trendy business centers and the peripheries have populations exceeding two million,” he adds.
What type of infrastructure and property developments are missing in Latin America today? What opportunities can developers take advantage of?
Population growth and urban sprawl are happening at a rapid pace, often faster than planning guidelines are established or permits issued. This uncontrolled growth is resulting in chaotic urban districts, usually in the periphery of the city centers.
By the year 2050, it is projected that 70 percent of the world’s population will be living in urban areas. Today, 80 percent of Latin Americans already live in cities, 40 percent of them in slums. What is missing is the provision of the right services and access to those services for a large portion of the population.
The emerging middle class is the engine growth of the largest cities in Latin America. It is a big demographic ready for consumption and new services. People are seeking experiences minutes away from where they work or live, but the city’s sub-standard infrastructure prevents efficient mobility. New mixed-use projects need to be built in the vicinity of those places. Developers must understand that a new demographic has emerged and that more sustainable projects that promote a synergy of uses 24/7 are the solution for the establishment of new urban cores. Foreign investors focus on central locations, targeting the high end of the market, but that is just a small fraction of the total population. The greatest base of the pyramid is located far from the traditional business center. That is where developers can find the most opportunities. These areas lack public places for integration. They are in need of places that promote the inclusion of different demographics, new urban cores, and settings that provide a unique experience and a sense of identity to the surrounding communities. When the suitable mix of uses is leveraged by sensitive planning, good design, and are easily accessible by public transportation and highways, they can be very successful. Sometimes they benefit from a public-private partnership approach resulting in invaluable environments for the community.
What trends should developers prepare for?
Traditionally, successful developments in Latin America have been that of seclusion, gated communities and restricted accessibility, which have created big islands within the city. They make traffic and congestion worse because they increase traveling distances, and they do not help promote integration. Whether in a mixed-use complex or in a planned community, we promote the establishment of true city connections that capitalize on vehicular and pedestrian traffic. Fewer barriers, more transit-oriented developments, and projects that have taken controlled traffic patterns into consideration create vibrant destinations.
Investors must keep an open eye for new opportunities. There will always be places that are unattended, that are diamonds in the rough. As long as they seek to create connections within the city, there will always be opportunities for new synergies of uses. What we need to keep doing is finding new ways of putting things together to add value to a project.
Interview by: Sarin Kouyoumdjian-Gurunlian, Press Manager
For more information, contact: Jennifer Keljik, marketing manager
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