How is the company organized?
Our holding company has three businesses: one is Panorama, a building with offices and a small mall. It has a view of the golf course and two floors of retail, with restaurants that serve around 150 offices. The project began construction a year ago and it is set for completion in December next year. We also have a project in the North, close to Ecuador. It is another large project, but geared at the lower segment, and we provide only land and services; residents undertake the construction of their homes on a site that we have constructed. We give them water, communications, light, security, some green areas, and some retail space at the entrance. They only pay for the land and then they move in and build their homes. We have sold 1,000 plots, and it is going to be finished in August of next year. The third project is the water company, to sell natural bottled water. We process mountain water, oxygenate, bottle, and sell it. This is a start up that we bought two years ago and today we are targeting the premium segment of the market.
How is the Panorama project positioned within the Lima retail and office space market?
We bought this land around five years ago. When Peru started growing and we saw opportunities, we conducted a study of the market to find out what the people in this area required. ıt transpired that that they wanted restaurants to cater for offices. At the time I was looking for partners to realize the project, which was a $125 million scheme. We started looking for partners that can help on the retail side, as well as for the building itself, and also a financial partner, because we source capital; we do not go through banks. For the construction of the building, we talked with Graña y Montero, a construction company, which has many companies under one umbrella. We have been working well together for one year now, and it is a 45% partner. With our partners we launched Panorama, the only building in Peru with offices and retail, and the only one offering these amenities. Panorama is one of the biggest projects in the Lima area.
Since you first bought the land and had to wait for it to appreciate and develop around it, can you briefly describe some of the changes you have seen in Lima's retail and office space market?
When I bought the land in 2007, there were no offices in the area, only old stock, but over the past five years office space has grown substantially. Nowadays, we have many opportunities to buy or rent office space here. Essentially, we entered the office market because it was not moving; it was a market available for entry. And with regard to retail, the reason we entered this market is because there were no retail stores on that particular side of the road. We saw the opportunity created by the construction around us, and entered the retail segment in pursuit of it.
The retail project in Piura that you mentioned is interesting in that you are providing services typically provided by the public sector.
As you know, Lima is the capital and most people live and work in the city, but now there is no more land available downtown. Therefore, we had to look for opportunities beyond of the city. We purchased land in Piura. Doing business there is rather different, being an informal environment where people do not have the income that found in the capital, which means you need to sell a different type of product. When you sell a residence in Lima, you sell a good quality building that can be purchased with credit, but in Piura the people cannot afford credit and work in the informal economy. And so we had to create a business model whereby we construct plots with all the services provided and sell the property in, for example, 50 installments, whereby when payment is complete the homeowners move in. They can construct their homes, and for Peru, at a price much lower than available elsewhere.
What are your aspirations regarding future projects?
When you realize these projects numerous retail and office opportunities arise. We now have on the table many projects beyond Lima, but nothing definite or concrete as we are waiting to see how the market develops over the coming months. but we are considered a group that identifies opportunities. And so, tomorrow, if I see an opportunity to enter another sector I will find a way to grasp it.
© The Business Year - January 2015