SAO PAULO—Fears of e-commerce taking off in Brazil have sunk shares of the country’s big mall operators this year, but industry executives expressed confidence that local shopping habits, the reputation of malls as public spaces safe from crime and other factors will help them avoid the shakeout that has hit their U.S. peers.

The optimism of executives gathered this week at the Shopping Center International Congress in Sao Paulo contrasted sharply with global investor sentiment about malls in the age of online retail.

E-commerce giants Amazon.com Inc. and Argentina’s Mercadolibre Inc. have set major expansions here, spooking some foreign investors and sending shares in Brazil’s three largest mall operators down more than 19 percent so far this year.

Executives and some major Brazilian shareholders say the threat of e-commerce is overblown. They say a better mix of non-retail tenants in malls, the high costs of shipping in Brazil and other factors should allow malls here to continue to thrive.

But some say the industry is overconfident, noting that Amazon has been scooping up local warehouses and negotiating air cargo deals in Brazil, while some retailers are reporting double-digit growth in online sales from last year.

“In New York, the investors are much more concerned about e-commerce than in Brazil,” said Thiago Muramatsu, chief financial officer at Cyrela Commercial Properties SA (CCP), which owns malls and office buildings. “In the U.S., they’re seeing a big crisis with malls closing everywhere, electronics retailers shrinking. But here in Brazil, there’s still upside.”

Several Brazilian executives and investors noted in interviews that the malls here attract a steady stream of patrons because they offer a relatively safe public environment in a country with the most murders in the world in recent years.

Home delivery, which Amazon and other e-commerce companies rely upon, is more difficult in Brazil due to shoddy highways, tricky state taxes and large-scale cargo robbery.

In addition, Brazil’s shopping mall market is not saturated, with just a fraction of the malls per capita found in the United States. Brazilian malls dedicate less area to retail, while many U.S. malls are just starting to diversify their tenant mix.

“Close to half of gross leasable area here is not retail. It’s dining … all sorts of things,” said Maximo Lima, a founding partner at real estate investment firm Hemisferio Sul Investimentos. “It’s a one-stop-shop for middle-class Brazilians to solve their life.”

Domestic Interest

While shares of the biggest mall operators have taken a hit, some Brazilian investors are still betting on malls.

Between November and April, Brazilian investment firm Vinci Partners raised 730 million reais ($187 million)—largely from domestic investors—for Vinci Shopping Centers, a vehicle known as an FII, which is Brazil’s answer to a real estate investment trust, or REIT.

Shares of the some of the larger, more liquid FIIs are also up this year, an indicator that local investors are more sanguine than their U.S. peers.

Still, mall operators are hedging their bets.

Firms such as CCP and BR Malls Participacoes SA, Brazil’s largest mall operator, have developed e-commerce units to adapt their business models for digital retail.

Multiplan Empreendimentos Imobiliarios SA, another major mall operator, told reporters the company plans to follow suit.

Those e-commerce units have taken various forms. CCP’s unit, for instance, allows customers to buy online, and pick up items at a mall.

“The customers will have to go to the mall,” said CCP’s Muramatsu. “So it may give them time to go to the movies, go to restaurants, even make additional purchases.”

By Gram Slattery & Gabriela Mello

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