The Chilean entrepreneur will inaugurate a new mixed-use project in Santiago this year while he is considering other ventures in different areas. His business flourishes while that of other local firms seems to languish due to low sales and high mortgage rates.

It's almost nighttime in Santiago and in front of a black fence there are about 20 people waiting to enter. The mid-March event summons real estate brokers and the press to tour the Urbana Center Apoquindo project, developed by businessman Diego Durruty.

Located on Apoquindo Avenue, in the commune of Las Condes, the 9,000 square meter land plot stands where the Adventist School once stood. It has two office towers, which range from 300 to 1,800 m2; a tower of apartments for rent, which vary between 32 and 50 square meters; and a supermarket, gym, restaurants, wineries, co-work space, and a 4,560 m2 gastronomic boulevard. Alltogether, it will comprise 90 thousand square meters located just 250 meters away from the Manquehue metro station.

And there is the businessman, leading the visit as he does privately every week to see the evolution of his project.

Days before, Durruty had spoken to AméricaEconomía about his initiatives and his aspiration to “humanize the city”, a concept that permeates throughout the interview. His vision is that someone can live, work and enjoy, all in the same building, saving on trips and gaining quality of life.

This is what is called Mixed Use Projects and Durruty has already participated with Grupo Urbana in the operation and investment of other initiatives, such as the Isidora 3000 building, although he assures that Urbana Center Apoquindo is a challenge of another magnitude.

“Many people tell me 'aren't that scary?'... a megaproject like this, worth 250 million dollars... It doesn't scare me, because the real estate business for me is cyclical. It takes 2 to 3 years to build, and if the market is down at that time, by the time the work is ready the economy has recovered,” says the businessman.

And, from his perspective, this is a downward moment in the sector and for the entire market.

“As a businessman I have made nearly 200 large real estate transactions (…) and never in 28 years I had seen the opportunity to buy some assets at discount prices, from distressed people, who are willing to sell at a discount,” he emphasizes.

The work is progressing by leaps and bounds and the businessman is clear about its completion and delivery date for the second half of 2024.

“The pandemic delayed construction by a month and we have managed the extra cost so that it is only 0.4% over the original price, so we are perfect,” says Durruty.

PATH TO INTERNATIONALIZATION

According to his resume, Diego Durruty studied Architecture at the Pontifical Catholic University of Chile (PUC) and completed a master's degree in Management at the School of Civil Engineering of the same university. He specialized in urban planning, working in research and consulting, which gave rise to his first company Pix Partners, a real estate consulting firm that expanded across eight countries in America and Europe, and which was sold in 2001 to the French group BNP Real Estate.

Then, he started to integrate vertically into the entire value chain of the real estate business, starting from market studies, financial advice, leasing and sale of properties, property management, asset acquisition, lease administration, real estate development, institutional investment and fund management.

In turn, institutional work with large international real estate groups allowed him to access specific knowledge of the office industry, mixed uses, multifamily, offices, shopping centers, warehouses and parking lots.

Throughout its history, Durruty has acquired 14 different companies.

In 2012, he entered the North American market by investing in Jaguar Growth Partners, a global investment management firm distinguished by a focus on growth platforms in developed and developing markets.

With all this expertise he founded Grupo Urbana, an integrated platform with multiple service and investment vehicles, present in seven countries. Today, Urbana and its subsidiary Pix Partners define themselves as leaders in the Chilean institutional real estate market.

“Urbana is a group of service companies that make up the entire real estate chain. They buy land, develop a project, bring in a construction company, we set the profit and general expenses of the construction company, based on a target price. And we co-manage the big games. “This allows us to be much closer to them,” details the businessman.

Durruty's next step for Grupo Urbana is to transform itself into an international company. “I want to do this in Latin America, the United States and Spain. My experience of three decades allows me to take this knowledge in Mixed Uses to new markets; I know how to reach international investors, I know about building, managing, financing and structuring legally,” he adds.

In addition to his real estate career, the businessman, passionate about charitable causes and rugby, has decided to venture into other areas, with the wellness fintech B21. With this startup, it grants credits for health benefits that are not covered by health insurance and medical co-payments. He is also excited about the growth of his chain of barbershops – called D' Barbers – which opens this year in the United States.

CONSTRUCTION CRISIS

But it is one thing to invest in and manage buildings and another is the environment in which they are inserted. And that is where Diego Durruty has his reservations, starting with the abandonment of the center of Santiago.

“This has happened in many cities around the world. The economic activity of Santiago in the 60s migrated to Providencia, in the 80s to the El Golf neighborhood and in 2000 to Las Condes. The world experience is that to revive what is known as downtown you must offer cheap offices and rental apartments. We did that with the Sara del Campo project in the center of the capital, mixing apartments with commerce, because without consumption there is no city,” he highlights.

In his opinion, to achieve this revival, the commune of Santiago Centro needs 20 to 30 years of governments committed to businessmen and universities to transform it and make it a safe place, as a starting point.

“This phenomenon has already happened in other cities and there are hundreds of case studies on how to solve it. But as long as there is no security and management plan it is impossible. There are 200 State buildings (in the center), these buildings have to be maintained, but renewing the public space, with the help of a heritage protection plan, similar to what was done for the center of Washington DC or San Francisco, and It means a collaboration of everyone, regional, national, private governments, universities...”, he lists.

However, the recovery of the center of the capital is only part of the serious problem that, in his opinion, the country has, and that has an impact on the construction and real estate business.

In fact, the most recent data from the National Institute of Statistics (INE) published at the end of March points to a loss of almost 40 thousand jobs in construction in the December 2023 - February 2024 quarter.

“I lived through the Asian Crisis from 1998 to 2002, the Subprime Crisis of 2008 and the Covid Crisis of 2020. And this is the hardest real estate crisis in almost 30 years, by far, because rates have reached such a level that there are no transactions. Nobody buys today, because with the interest rates that exist (in the market) it is impossible,” he laments.

The result is that the residential real estate market, which is equivalent to 70% of the construction industry, has been paralyzed and, with this, the country's economy is affected, considers the businessman. “I have never seen so many distressed assets (real estate investment below market value) in the local market,” he says.

This is because construction companies traditionally go bankrupt in crises, since property sales slow down and they are not able to pay their loans or meet their obligations.

That has been the big difference between Durruty's firm and the other construction companies in the market.

“It is not that the crisis does not affect real estate companies. Some are complicated, because they did business with a lot of debt to improve their profitability and everyone gets scared in a crisis. The banks squeeze it. The real estate companies that are successful in these crises are those that operate with low debt,” explains the businessman.

Its operation took more years to grow, but it is more stable. The secret, according to Durruty, has been the offer of key services. Being a real estate services company, the Urbana Group is committed to service contracts such as the management of funds, assets, and buildings; the management of leases and real estate development.

From the current crisis, there is only one recipe to get ahead. “With jobs, with growth, with productivity,” says Diego Durruty.

And with the certainty that the pandemic also changed the real estate business and its metrics. If before Covid each user occupied 10 m2 of office, today that has dropped by almost half.

“If the demand for offices and restaurants is half, who will resist? Well-conceptualized quality buildings, those that constantly reinvest in maintaining value; and those that have failed are the lower quality buildings, which were poorly designed and with a bad investment policy,” he says.

He also confirms that the real estate business maxim seen in the movies is true: location, location, location.

“[Real estate] is the best business in the world. Rich families in Chile have between 30% and 50% of their wealth in real estate,” concludes Durruty.