As the chairman of JHSF Participações SA, a Brazilian real estate and hospitality firm, José Auriemo Neto has no shortage of things to do.
Yet during a recent interview at one of his company’s Fasano hotels in Manhattan, he mapped out the conglomerate’s precise and quality-driven strategy with great care, at the step-by-step speed he seems to prefer. The location — the serene and slightly clubby “caffe” at the Fasano Fifth Avenue — was testimony to that approach. It took more than 10 years to buy the prime real estate between East 62nd and 63rd Streets from an octogenarian, who changed the asking price six times before a deal was finally struck. Knowing that uptown, non-co-op sites overlooking Central Park are hard to come by, Neto said, “It was important for us to be in this location, so we were patient. Similar situations have happened in London and other cities for the company. We are very focused on the most prime assets. But it’s not only for us. We also know that’s what our clients value.”
Without that decade-long wait, there would not have been any Fifth Avenue hotel with 3,000-square-foot Thierry Despont-designed duplexes distinguished by Brazilian, Italian and other antiques on the Upper East Side. Envision cashmere-lined walls. “We are always following the client — where are they staying, what are they thinking about, what are their habits.…Being client-driven today is a skill,” Neto said. “The companies that are doing the best are getting outside [their offices], not staying inside, to really understand what is happening around you and how you are interacting with your clients.”
The family-founded JHSF started in 1972 and has a plethora of businesses in property development, shopping centers and fashion retail, hospitality and gastronomy, international airport and JHSF Capital. The swishy Fasano hotels alone have 11 ultra-luxe sites including the Hotel Fasano Las Piedras in Uruguay and two outposts in New York, one a restaurant just off Park Avenue and the other the Fifth Avenue hotel. Along with travel and hospitality services, there are about 30 restaurants including some in shopping centers. Shopping Cidade Jardim, Shops Jardim and Shopping Bela Vista are among the properties in South America. Three years ago the company ventured into air service with the opening of São Paulo Catarina Executive International Airport as a way for its well-heeled clients to avoid the sometimes hours-long traffic getting to and from São Paulo. What began with two hangars now has 10 to accommodate the burgeoning number of private jets based there.
All in all, JHSF’s client is at the center of everything it does, and the company always starts with the client’s individual preferences and needs before offering a multitude of services. “For us, what is important is to have them happy with the company,” Neto said.
The highly stylized private airport caters to a high-flying crowd. Brazil has the second-largest private jet fleet in the world — second only to the U.S. There are 100-plus airplanes based at Catarina airport and 90 of the owners already do business with JHSF whether that be through its residences, hotels or restaurants. Having those recurring customers creates a “very nice ecosystem” and motivates the company to provide good quality and service, Neto said.
JHSF’s specialized service includes giving clients access to 23 private concierge shoppers who are available all the time. Whatever is requested will be retrieved from one of the shopping centers, or if need be, direct through another mall or through the designer brands. JHSF strives for long-term relationships that foster growth through each brand’s respective ethos. With 4,000 employees, the company’s executive team is primarily comprised of veterans with 10 to 15 years of tenure. But recruiting, training and retaining new hires for its ever-increasing portfolio of shopping malls, hotels and restaurants is time-consuming and increasingly difficult, Neto said.
As for the pressure that comes with running a family-founded business, preserving that legacy and being responsible for his employees’ livelihoods that provide for their families, Neto said, “We say that we are a family-owned business but professionally run. I am chairman of the board and I became the chief executive officer almost 20 years ago. Since the beginning, my father has always had a professional mindset to provide the right information for the company to grow. The good thing about being a family business is that we get a lot for the quality of our service.”
The company is targeting 500,000 to one million high-end clients in Brazil, who are well-traveled and highly informed about the luxury market, according to Neto. Banking on a holistic approach, he believes that a mall is not a place for brands to rent space — companies need to be more connected to the regions in which they sell. To that point, JHSF has a track record of full-time operating more than 20 brands in Brazil including Celine, Brioni, Brunello Cucinelli, Emilio Pucci, Gianvito Rossi, Aquazzura and Chloé. JHSF has a 20 percent stake in Valentino in Brazil. The company owns five malls and has two more under construction. “What is more important is that we are the most relevant partner in Brazil for LVMH. Most of their brands’ business comes from our malls,” Neto said. But it’s not only LVMH Moët Hennessy Louis Vuitton brands that flock to JHSF properties: Gucci, for example, has three stores.
Last year Shopping Cidade Jardim, which also publishes a quarterly magazine, celebrated its 15th anniversary and has added space through the years. Dior, Fendi, Celine, Brioni, Balmain, Chloé and Emilio Pucci are among the luxury brands that are exclusive with JHSF in Brazil.
Meanwhile, the Catarina Fashion Outlet, which was unveiled in 2014, is being expanded to 560,000 square feet to accommodate 300 stores, Neto said.
Looking ahead, JHSF is planning new projects with logistics geared for drones for deliveries and transportation in the coming years. “At some of the shopping malls, they will probably be the hubs for transportation [as in eVTOL aircraft,] because they need to have public stations,” said Neto. Some are speculating that consumers could have access to eVTOL aircraft operated by pilots in two years and automated eVTOL aircraft in 10 years.
A Fasano hotel in Miami is expected to be completed in about 18 months, and European ones are being planned. London is high on the list and has been a 10-year search. Along with hotels, JHSF plans to broaden its real estate development in other countries. With its vast amount of land, Brazil lends itself to further expansion for years to come with São Paolo, Rio de Janeiro, Trancoso and Salvador being among the prime locales well-suited for JHSF clients, according to Neto.
“What’s important about this strategy is to be consistent. We don’t need to go too fast. There are companies that are really big — LVMH, Kering. Of course, our company does not have that size or scale. But we are a relevant company for the lifestyle segment. It’s important to go step-by-step and focus on quality,” Neto said.
The retail business started about 15 years ago through a joint venture with Hermès, and Prada later followed. Intent on not just renting space to fashion companies but helping brands define strategies for Brazil and providing the necessary support, JHSF strives to determine, “How happy is our client in the country? Are they doing good business? Are they happy with the company and the strategy that we are providing them?” he said.
With a major PR and marketing team, JHSF is well-equipped to support brands on multiple fronts. When LVMH decided to open a large Louis Vuitton store, JHSF remodeled part of the Shopping Cidade Jardim to make that happen. “That’s the kind of thing that we do,” Neto said, adding that a similar scenario played out with Hermès years ago. Additional store space has also been needed for Dior two or three times, and in JHSF’s Shops Jardim, the first Dior store for women’s and men’s offerings in Brazil is being developed. Gucci and Louis Vuitton are also in the works there. Offering a bespoke strategy for individual brands is the greatest point of differentiation, Neto said.
In the midst of the pandemic, CJ Shops — the open-air property about twice the square footage of Bergdorf Goodman store in New York — was unveiled next to the Fasano hotel in São Paulo. In addition to tenants Gucci, Dior, Chloé and Isabel Marant, Louis Vuitton will be opening a store there. In addition, the Catarina Fashion Outlet, which debuted last year outside of São Paulo, is considered the country’s prime one.
Dovetailing with clients’ increasing interest in well-designed properties, they are understanding how being better educated is an advantage in terms of where they expand and how they invest, Neto said. For a decade, JHSF has been bringing 20-plus fashion-minded clients to select Paris Fashion Week shows or arranging for exclusive experiences, like back-of-the-house visits at Hermès.
One of the upsides of Boa Vista Village is a surf pool that uses PerfectSwell technology from the American Wave Machines. Another one is planned for the São Paulo Surf Club, which will be the city’s first surf club. Just as the triathlon circuit was geared for sports-minded clients, so too is the surf pool.
“We are finding that sports are increasingly connected to our clients’ lifestyles. It’s really impressive how we are seeing them dedicate a large portion of their time to sports much more than they did in the past. They are also spending more time with their families,” Neto said.
JHSF’s expansion plans include a three-year multiphase one at the Fazenda Boa Vista, a 12 million- square-meter site one hour outside of São Paulo that features a Fasano hotel, two golf courses, two polo fields, a complete triathlon circuit, 15-plus tennis courts, an equestrian center, 885 private residences and a range of other perks. Three million-plus square meters are earmarked for the Town Center of Boa Vista Village, an open-air mall with 200 stores, which is scheduled to open by the end of next year. In addition, Boa Vista Estates, which will span 6 million square meters, is on the docket with help from architects Sig Bergamin and Murilo Lomas.
Given the breadth of its portfolio, the company routinely works with numerous architects for its properties, sometimes enlisting more than one for select projects. Different teams work on different hotels as well as its other real estate development. There is also “a very relevant” internal team of about 50 people that is well-versed in design, tenants’ needs, the physical layout, proximity to restaurants and foot traffic flow, Neto said. The residences being planned for Boa Vista will range from 4,000 to 10,000 square feet in size and homeowners can choose from 15 high-end architects. Unlike in the U.S, where some developers favor McMansions, that cannot be done in Brazil, where JHSF clients have more refined preferences, according to Neto.
With design being a key component for all of the properties, JHSF works with such leading architects as Bergamin, Lomas, Isay Weinfeld, Carolina Proto, Marcio Kogan, Felipe Diniz and Gui Mattos. As an indicator of JHSF’s design-centric approach, professional polo player Nacho Figueras (who has a signature design business), collaborated with Proto on a residence model at Las Piedras in Punta del Este, Uruguay. Figueras also designed a polo field there and more architectural assignments may follow. Uruguay was chosen for a JHSF project because of its proximity to Brazil, and a country Brazilians regularly visit. The client base at Punta del Este consists of about 30 percent Brazilians, Argentinians and international residents, and Uruguayans comprising the remaining five to 10 percent.
With environmental, social and governance guiding JHSF’s direction, that means that each project has specific strategies regarding energy, water, waste and community impact and that will lead to new investments. That should be money well-spent since consumers are increasingly ESG-minded, Neto said. ESG is top-of-mind for many companies, as evident at the World Economic Forum in Davos, Switzerland, which he attended for the first time earlier this month. Whether its retooling supply chains or refining products, companies are taking action and increasingly see it as a cost in doing business.
As for the suggestion that Brazil symbolizes climate change for millions — due to the destruction of the Amazon rainforest — Neto said Brazilians are very aware of that and the new government is “very focused on that matter,” and is developing new parameters to have a positive environmental impact. Brazilian-born designer and Costa Brazil founder Francisco Costa has been very active in raising awareness in U.S. and Brazil (and his clean beauty products are in all Fasano hotels.) Allowing that ESG — like digitalization or electric cars — is a necessary reality for all companies, the challenge will be balancing the financial commitments to do so, not only through governments’ support but companies’ investments, too. To that end, as of next year all incoming and outbound flights at the new airport will be certified net zero, as part of its budget, Neto said.
Nearing his 25th anniversary with the company, Neto said the shopping mall division was started in 1998 aiming for a quality level that did not exist at that time in Brazil. Focusing on the high-end clients serves the company well because that tier of 500,000 to 1 million is more resilient than other segments in the country, according to Neto.
“From my point of view, there is no institutional risk for Brazil. Of course, this [recent] election was very polarizing — 50/50. There was this mess. But by the end, all of the institutions in Brazil once they saw that democratization was at risk they found a very stable path to organize things,” he said.
Even still, the volatility of the country’s macro-economic challenges is undeniable. Reiterating that resilience, Neto said the interest rate for consumers “is not that big. Once they have savings, when interest rates are higher, they make more money compared to when they don’t. On the other hand, when you have lower interest rates, you can have more growth and long-term investments in long-term projects…”
To that point, the company adjusts its goals to that long-term strategy. “We are not pessimists. We are optimists. When we have lower interest rates, we may have more competition. When we have higher interest rates, we have less competition, but the client is still resilient,” Neto said.