Even as the pandemic rages on, Uruguay’s largest mall developer is pushing ahead with new projects, buoyed by government tax breaks that he says will contribute to an investment-led recovery. Carlos Lecueder, who manages nine shopping centers and half a dozen office towers, is planning $60 million in projects including a new shopping center that will begin construction in 2021. That could grow to as much as $100 million if he can convince investors to move forward with a partnership to build a World Trade Center-branded office tower in the coast resort of Punta del Este. President Luis Lacalle Pou, who took office March 1, expanded tax breaks for new businesses and construction projects to revive an economy that analysts see growing 3.4% in 2021 after Covid-19 causes it to shrink an estimated 4.3% this year.
“Today, there are a series of tax benefits the likes of which have rarely been seen,” said Lecueder, who owns minority stakes in the malls and a free-trade zone that is finishing its second tower this month. “I think Uruguay is going to see an important increase in investment in 2021”Lecueder’s plans represent an optimistic bet on the future of commercial real estate at a time when work from home policies and e-commerce are seeing a boost from pandemic stay-at-home measures. He expects retail sales at his malls to fall about 30% this year after the government ordered them closed for almost three months early in the pandemic and finish next year 10% below 2019 levels.
Still, Lecueder is confident that Uruguayans’ love of socializing and shopping in malls means brick and mortar stores will continue to dominate the local retail industry for at least the next five years even as e-commerce gains market share.
Uruguay’s global services industry may even benefit from the pandemic, he added, as multinational companies turn to the country’s free-trade zones to qualify for tax breaks and house their accounting, financial and IT services. Rules that require employees in free zone to be based in those areas have been temporarily waived to allow them to work from home during the pandemic.
The WTC Montevideo Free Zone has already leased 40% of its new tower, which he sees rising to 70%.