Big guns lose bat­tle for Buf­falo City

New­comer Bil­lion wins race for re­gional mall

Finweek English Edition - - Property - JOAN MULLER

THE RACE TO BUILD Buf­falo City’s (East Lon­don) first re­gional shop­ping cen­tre has fi­nally come to a head with black-owned prop­erty de­vel­oper Bil­lion Group emerg­ing as the front run­ner.

Fol­low­ing months of un­cer­tainty about which one of four pro­posed re­gional malls would even­tu­ally see the light of day, Bil­lion de­vel­op­ment man­ager War­ren Rovelli last week con­firmed that earth­works for its Hem­ing­ways Mall have com­menced. The 72 000sq m shop­ping cen­tre will be built next to Tsogo Sun’s Hem­ing­ways Casino, along­side the N2 high­way in East Lon­don.

The Jo­han­nes­burg-based Bil­lion Group, a rel­a­tively small player in the com­mer­cial prop­erty mar­ket founded by Sisa Nge­bu­lana, was up against three of South Africa’s largest prop­erty de­vel­op­ers/own­ers in­clud­ing Zen­prop, In­vestec Prop­erty Group and At­ter­bury Prop­erty.

Nge­bu­lana, a law grad­u­ate from Na­tal Univer­sity (Mar­itzburg), has close ties with East Lon­don. He grew up in the East­ern Cape and ma­tric­u­lated at St John’s in Mthatha in the early Eight­ies.

Un­til re­cently, the four ri­val de­vel­op­ers were vy­ing ag­gres­sively to win the sup­port of na­tional re­tail­ers, who usu­ally dic­tate whether a pro­posed shop­ping cen­tre goes ahead or not.

Though ma­jor re­tail­ers Wool­worths, Ed­con and Fos­chini each ini­tially sup­ported a dif­fer­ent cen­tre, it seems that all three are now go­ing into Bil­lion’s Hem­ing­ways Mall. That fol­lows Zen­prop’s with­drawal of its pro­posed Bea­con Bay shop­ping cen­tre end-2006. At­ter­bury Cape di­rec­tor Ger­hardt Jooste says they have also de­cided to put their plans on hold. At­ter­bury, which joined the race at a rel­a­tively late stage, an­nounced am­bi­tious plans in Oc­to­ber last year to build a 50 000sq m lifestyle mall, a value mart, a private hospi­tal, a num­ber of of­fice blocks, a Mo­tor City, a ho­tel and a res­i­den­tial com­po­nent on a 117ha site on the Gonu­bie/N2 in­ter­change.

Jooste is still con­vinced that their site is best placed to give East Lon­don res­i­dents their long-awaited mega-mall. But he con­cedes that at the mo­ment the Buf­falo City area can only sup­port one new re­gional shop­ping cen­tre.

Says Jooste: “We will still go ahead with our project but it will prob­a­bly not hap­pen for at least an­other four to five years, when the area will be big enough to sup­port an­other re­gional mall.”

That leaves only In­vestec Prop­erty Group. Al­though the lo­cal coun­cil ap­proved plan­ning and zon­ing ap­pli­ca­tions for its pro­posed East Coast Mall end-Fe­bru­ary, the group is now re­con­sid­er­ing its op­tions.

In­vestec Prop­erty Group’s Ron­nie Se­vitz says it seems that Bil­lion now has the ma­jor na­tional ten­ants on its side. “We be­lieve Gonu­bie is the best place for a re­gional mall, but I don’t think we can com­pete with the scale of the Hem­ing­ways de­vel­op­ment.”

Se­vitz says the group may con­sider down­siz­ing its East Coast Mall from the orig­i­nal 60 000sq m to 30 000sq m. A de­ci­sion will be made within the next few weeks, but in­dus­try in­sid­ers doubt whether In­vestec Prop­erty Group will pro­ceed at all given that it has yet to sign up a sin­gle na­tional ten­ant.

It no doubt comes as a blow for Zen­prop, At­ter­bury and In­vestec Prop­erty Group that a rel­a­tively un­known such as Bil­lion has man­aged to thwart their ef­forts to tap into the po­ten­tially lu­cra­tive and un­der-ser­viced East Lon­don re­tail mar­ket.

It’s been sug­gested by some that Bil­lion doesn’t have the ex­pe­ri­ence to play suc­cess­fully in the re­gional shop­ping cen­tre arena – usu­ally the do­main of large in­sti­tu­tions and de­vel­op­ers. The group has only been in­volved in one other re­tail de­vel­op­ment to date – a 35 000sq m town­ship mall cur­rently un­der con­struc­tion in Mdantsane on the out­skirts of East Lon­don.

But it’s not an un­likely sce­nario that Bil­lion could end up part­ner­ing with an as­tute re­tail de­vel­oper such as At­ter­bury now that the lat­ter has put its own de­vel­op­ment plans on hold. More so given the fact that the two al­ready have an es­tab­lished re­la­tion­ship – Bil­lion is the BEE share­holder in At­ter­bury’s R6,5bn private prop­erty fund, At­t­Fund.

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