Southern Exposure
Local Roadblocks
Michelle Seaton
01/01/2008

Many developers accustomed to the relative ease of working in the United States have struggled to deal with the local bureaucracies in Latin American countries. "It’s difficult to build here. You don’t just trot out and get a construction loan like you would in California," developer Hal Wright says. "It’s harder for Americans in a Spanish-speaking country to get it done. The permitting is difficult and erratic, and we have no permanent financing here in any volume. Most of my buyers pay cash."

THE RELATED Group’s Icon Vallarta in Puerto Vallarta, Mexico, will have three towers designed by the Miami-based Arquitectonica. The project is one of several that the Related Group has in the works in Latin America.

The solution is to partner with locals who can navigate projects through the labyrinths of local bureaucracy. In terms of the sheer number of developments in Latin America, the Related Group is one of the most aggressive builders in the region, with multiple condo high-rises going up in nearly every country. CEO Jorge Perez was born in Argentina but raised in Colombia. He came to the United States as a college student and stayed. Perez became a real estate developer, originally building affordable housing in Miami and then switching to luxury high-rises in the ’90s. In the past few years, he has worked with contacts in Latin America to build a growing empire of new luxury housing developments in those countries.

Perez’s latest effort in Mexico is Icon Vallarta, a three-tower project designed by Arquitectonica and Yoo by Philippe Starck that will have 343 units anchored and branded by a W hotel. Prices start at $299,000, and buyers have the option of putting their unit into a hotel pool. "The prices are higher than the market; this is a high-end product," Perez says. The second tower was almost 40 percent sold as of last August. Related has a similar project going up in Acapulco, and another, with 1,000 homes and low-density villas in Zihuatanejo, Mexico, is in predevelopment.

ONE OF Icon Vallarta’s key selling elements is interior design by Yoo by Philippe Starck.

The Related Group also owns land in San Miguel de Allende, a tourist destination northwest of Mexico City. Here it will build a 60- to 80-room hotel, with 250 condos and another 250 homes surrounding the hotel. Perez has deals brewing with the Mandarin Oriental in Cabo San Lucas and with Starwood in Playa del Carmen, and another project in the works in Mexico City. "We’re busy in Mexico," Perez says with customary understatement, but he stresses that his knowledge of the culture and his ability to work successfully with locals have been the cornerstones of Related’s success.

"I know a lot of things are done with friendships and relationships here, and they are built slowly," says Perez, who spends days at a time in each location, socializing with politicians and business owners. "That’s how we’ve seamlessly gone into these markets. We’re not the foreigners coming in to build a building and then get out of town. Our first building in any country allows us to build the expertise to get the best local people to work with us, the best landowners and the best developers. We’re bringing jobs to these countries and promoting their cities, so the senators and presidents and mayors are happy to work with us."

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