Las Mercedes, the neighborhood that became the epicenter of luxury and capitalism in Venezuela

Night falls in the Venezuelan capital and a roulette wheel with hundreds of dollars in chips spins fast in a luxury hotel on the east side of Caracas.

Faces dominated by anxiety follow the roulette wheel, motionless for a few seconds, until it stops spinning and a young man lets out a cry of joy: he has just won US$ 500 (about R$ 2,600).

On the other side of the table, an elegant woman in her 50s quickly wrinkles her nose, hesitates for two seconds, and bets another $200.

A good part of the Venezuelan capital is already resting, protecting itself from the insecurity of Caracas. But the night in Las Mercedes is just beginning.

After many years of decline, due to the strong economic crisis in the country, the bustling nightlife of this quiet part of the capital managed to be reborn, in part, thanks to liberalization and the economy, which, in practice, was dollarized and once again allows private investment. , although increasing the country’s inequalities.

“Las Mercedes was a bubble within a bubble,” says Darwin González, an opposition politician to President Nicolás Maduro’s government and mayor of Baruta, the Caracas municipality where Las Mercedes is located.

“It has become a privileged region that is nothing like the rest of Venezuela. Some people go to Las Mercedes and feel a distortion of Venezuelan reality,” he admits to BBC News Mundo, the BBC’s Spanish-language service.

The mayor went so far as to say that for “several years” he has not received reports of crime in the region. Caracas is known for being one of the most violent cities in the world.

Immune to crisis

For more than a decade, Venezuela has been plunged into a social and economic crisis, which has caused its Gross Domestic Product (GDP) to drop by more than 75% between 2013 and 2021. The crisis took more than seven million Venezuelans abroad, in search of a better future.

But, in Las Mercedes, it is possible to observe signs of the country’s new economic situation.

With the unofficial dollarization, luxury restaurants and numerous stores with international brands that were absent from the country only four or five years ago have returned. And several luxury business and residential buildings continue to be built in various parts of the neighborhood.

“Las Mercedes has become the cultural, economic and financial epicenter of Caracas and Venezuela”, says the mayor.

At the beginning of the 20th century, Las Mercedes was a residential neighborhood, made up mainly of two-story houses. But since the end of the 1990s, the houses have gradually given way to shops and restaurants.

Other subsequent modifications to the legislation made it possible to increase the height of constructions and the population density. These measures meant that, little by little, Las Mercedes was consolidating itself as a “pink area” of the capital, with company headquarters, shopping centers and entertainment venues.

Although the crisis has also affected this region, around ten architectural projects have been built in Las Mercedes in the last decade, such as Torre Sena, with 19 floors of “luxury offices”, and the colossal Centro Financiero Madrid, with a total area of ​​30 thousand m².

And lately, everything has accelerated. On the ground floor of Torre Jalisco, a Ferrari brand car dealership was opened in 2021. His managers declined to talk about prices or give interviews.

Also inaugurated in November 2022 was the Galeria Avanti, a six-story department store with a large screen on top of the building, offering products from Balenciaga, Dolce & Gabbana, Versace, Gucci and other haute couture brands. .

Two days after it opened, I found several customers walking up to take a look, but many discreetly turned away when looking at the prices.

The offer is varied and prices are similar to those found in other Latin American capitals. Handbags cost thousands of dollars and shoes exceed US$ 500 (about R$ 2,600). These are unaffordable prices for most Venezuelans.

The minimum wage in Venezuela’s public sector – the country’s largest employer – is 130 bolivars a month (about US$10, or R$52). In March 2022, the amount was equivalent to US$ 30 (about R$ 155).

“It’s really beautiful, it feels like you’re in another country and you get everything,” says customer Yessica Villamizar.

“There are affordable things, like beauty and personal care products, but there are also very expensive things that not everyone can afford,” says Villamizar, who lives in Caracas and bought two makeup items.

Avanti’s director of communications, Oswaldo Malpica, says that the demand for luxury products has increased exponentially in the last year, in parallel with the economic growth experienced by the country after the economy hit rock bottom during the covid-19 pandemic.

“The case of Las Mercedes is emblematic for having established itself as the pink zone of Caracas. Now, all luxury-oriented businesses want to be present here, be it clothing, restaurants or nightclubs”, he tells BBC News Mundo.

Contrast and inequality

Skyscrapers keep popping up across the region and many will open in the coming years.

There are buildings under construction with more than 20 floors, such as the Nest, Haya and Victoria towers. But perhaps the most ambitious project is the Skypark, an innovative 38-story skyscraper. It will house a hotel, commercial points, luxury apartments and an external advertising screen, similar to Times Square in New York, in the United States.

Its construction is a reflection of economic recovery, in contrast to the situation in much of the country.

The Survey of Living Conditions (Encovi, for its Spanish acronym), published in November 2022 by the Universidad Católica Andrés Bello, in Caracas, revealed that multidimensional poverty has decreased in Venezuela for the first time in seven years, but 58% of the population still lived in precarious conditions in 2022.

At the same time, inequality has increased, making Venezuela the “most unequal” country in the region.

According to the survey, the difference in income between the poorest and the richest segment of the population is now 70 times. And 40% of the highest income households are in Caracas, which concentrates only 16% of the country’s households.

Adrián Pérez Craig is the director of Peraig real estate, which works on some of the Las Mercedes projects. He claims that many of the newly opened buildings are “nearly 100% sold and nearly 80% occupancy”. But other people who work in or around the buildings say many offices remain unoccupied.

The real estate expert explains that many entrepreneurs buy offices as an investment, to protect their money from galloping inflation, waiting for property prices to rise, after the violent fall during the pandemic.

According to figures from the Venezuelan Finance Observatory (OVF) for November 2022, Venezuelan annual inflation was over 200% – one of the highest in the world.

Pérez Craig claims that, in 2022, prices stopped falling violently, as they had for many years. The fall in the sector was so great that an apartment that, ten years ago, was worth more than US$ 1 million (about R$ 5.2 million) is now offered at half the price.

But the neighborhood’s rebirth has revived the nickname that was previously used by several Venezuelan businessmen: “Las Mercedes is like little Manhattan in Caracas”. Its vibrant nightlife and its numerous constructions, added to the apogee of luxury and capitalism evident in its streets, demonstrate this.

“Tall buildings are being built,” says Pérez Craig. “Not as high as New York’s, of course, but for Venezuela it’s a lot, especially given the current situation.”

“We had very difficult years, which caused prices per square meter to drop significantly”, says the mayor of Baruta, Darwin González. “This represented a good business opportunity as many people knew that sooner or later the economic crisis would end and they would make a profit.”

“A good part of Las Mercedes is a big long-term investment,” argues Darwin González.

Money ‘well and badly earned’

Venezuelan economist Luis Vicente León, president of the Datanálisis consultancy, says that the current boom in Las Mercedes was due to several factors.

“Some sectors of the economy improved last year, such as commerce and construction”, he explains. “Furthermore, the increase in oil exports has meant that there is more money in the streets.”

“Another point that many people don’t understand is that Venezuela’s upper class remains relatively large and still has a lot of money,” according to León.

A recent report by Datanálisis estimates that the Venezuelan upper class represents around 2% of the country’s total population, while the upper middle class totals 4%.

“There are almost two million people, more than the population of the metropolitan region of Panama City, for example”, explains the economist. In Brazil, two million people correspond to the approximate population of the city of Curitiba (PR) or the metropolitan region of Vitória, in Espírito Santo.

León points out that, among Venezuelans with high purchasing power who frequent Las Mercedes, there are people who spend “money earned honestly for decades” because they are afraid that their resources will be frozen, as well as businessmen and politicians linked to the government who have suffered sanctions and not can spend their fortunes abroad. But there is also money from corruption.

“What is not right is accusing everyone who buys in Las Mercedes of being corrupt”, explains the economist. “We cannot put the corrupt and those who earned money honestly in the same bag.”

According to Transparency International’s corruption perception index published in 2021, Venezuela is the fourth most corrupt country in the world, among the 180 nations surveyed.

Casinos and nightlife

The mayor of Baruta likes the nickname “little Manhattan”. He says he feels “proud” to have a region that can be considered “an example” for the rest of the country.

“The municipality has legal security, planning and support for investors. That is why it has achieved a certain degree of development”, he adds.

Las Mercedes also benefited, in 2021, from a reform by the Maduro government, authorizing the opening of dozens of casinos in the country – several of them, in this neighborhood of the capital. Gambling was illegal in Venezuela a decade ago.

Former Venezuelan President Hugo Chávez (1954-2013) had banned casinos across the country, saying they contributed to the deterioration of society. Chávez compared them to prostitution and drug use.

In addition to enriching the nightlife, the casinos brought more money to Las Mercedes. The mayor claims that this money is used to invest in disadvantaged sectors of the municipality, some of them just a few kilometers from the neighborhood.

At midnight, some of Las Mercedes’ restaurant patrons start heading to nearby bars, mingling with the younger crowd who come out to celebrate. The neighborhood also became a focal point for nightlife in Caracas, which remained decadent for many years due to the crisis and insecurity.

On their way to trendy clubs and bars, the wealthier Caraquenos show off their latest model sports cars and pickup trucks. Along the main avenue of Las Mercedes, Ferraris and Maseratis pass by, roaring their engines and mixing with other much more modest vehicles, some from the beginning of the 21st century.

Part of the nightlife is concentrated in the casinos. At a slot machine in the casino at the Tamanaco hotel (a five-star establishment at the highest point of Las Mercedes), a 21-year-old young man arrived from a poor neighborhood in western Caracas with US$50 (about R$260). and continues to bet, even after winning $100.

“There was no food in the house because my mother lost her job recently, so I came to try my luck,” he says, his eyes fixed on the electronic roulette wheel.

“I usually come here and, sometimes, I win, but many times I also lose”, he continues, adding that he is trying to “not get addicted”.

“In the west of Caracas, there are also casinos,” he says, “but I like Las Mercedes better because here, in the east, everyone takes care of themselves and the experience and service are a thousand times better. It’s like being in another country. .”

-This text was originally published here