Chilean retailers intend to invest more than $7 billion in real estate.

Chilean retailers have gone on the offensive in response to the country's excellent economic climate, new retail format potential, and worldwide chances.

According to a report published in the Chilean business magazine Pulso, major Chilean retailers plan to invest $7.143 billion by 2017. Falabella is planning a nearly $4 billion investment, according to the story, which will expand the company's already vast retail portfolio to 527 stores and 51 malls. qatar houses

Following that is Cencosud's planned investment of $1.169 billion, SMU's projected investment of $1 billion, and Parque Arauco's planned investment of $450 million.

Ripley, La Polar, and Hites, among other major stores, are planning investments of $350 million, $150 million, and $101 million, respectively.

Increased consumer demand, fueled by robust economic growth, consumer credit availability, and increased consumer confidence, is one element driving the investment plan. Chile's planned $100 billion in mining investments has generated long-term prospects for large retail formats in cities surrounding mining areas, which are expected to see rapid economic and demographic expansion and have low GLA per capita ratios.

Santiago has seen an increase in larger format saturation levels as well as longer commuting times due to a major increase in auto ownership and limited expansion in road networks. As a result, smaller sizes have become increasingly appealing, particularly in new residential areas that have sprouted up outside of city centers.

However, a large amount of the proposed investment is earmarked for cities outside of Chile. Chilean retailers are already making inroads in Argentina, Peru, Brazil, and Colombia, as they seek to bring operational know-how to locations with strong economic growth prospects, lower retail penetration rates, consumer credit development chances, and reduced operating costs. Ripley, for example, intends to open ten stores in Colombia, while Falabella intends to expand into Mexico.

Falling capital costs are another element pushing capital-intensive expansion methods. In 2012, the Chilean government issued foreign currency-denominated sovereign bonds at historically low rates, allowing private enterprises to expand their international capital raising operations. Given Chilean retailers' high capital requirements and the big number of international investors looking to rebalance their portfolios with exposure to prospective higher-growth regions, it wouldn't be shocking if foreign money were used to support a big chunk of Chilean retail expansion plans.

The Chilean stock market is growing optimistic about the retail sector's prospects. The Santiago Stock Exchange's Retail Index has gained about 15% in the previous year and 7.45 percent in the last 30 days. However, as corporations steadily expand operations in many regions with uncertain economic growth patterns and major operating risks, listed retailer stock values are very likely to face significant volatility in the future.