A dream came true

A black en­tre­pre­neur thought big­ger than his world al­lowed

Finweek English Edition - - Economic trends & analysis - SIZWEKAZI JEKWA

IN 1987 A SUC­CESS­FUL prop­erty de­vel­oper in Soweto de­cided that he wanted to build a shop­ping mall in the town­ship that would ri­val the qual­ity of those he’d seen in Jo­han­nes­burg’s north­ern sub­urbs. It would be al­most 20 years be­fore his dream be­came a re­al­ity. His name is Mike Nkuna and he’s now one the most suc­cess­ful com­mer­cial and re­tail prop­erty de­vel­op­ers in South Africa. This is his story...

Nkuna be­gan work­ing in his fa­ther’s butch­ery in 1979 to sup­port his fam­ily, but af­ter three years he de­cided to branch out and es­tab­lish a small hous­ing con­struc­tion com­pany at a time when the then gov­ern­ment was of­fer­ing hous­ing sub­si­dies to black res­i­dents.

In 1983 Nkuna got his first big break. The mu­nic­i­pal­ity in Soweto was look­ing to sell a plot of land, which they of­fered to Nkuna. He bought the plot for R100 000 and wanted to de­velop it. “It wasn’t easy for black peo­ple to raise that kind of cap­i­tal at the time. But Perm Bank came to my res­cue and I man­aged to get some fund­ing,” says Nkuna.

At the same time Bri­tish Pe­tro­leum of­fered to buy the plot from him to and build a fill­ing sta­tion on it. Nkuna de­clined the of­fer and in­stead asked them to help him de­velop the plot into a small con­ve­nience shop­ping cen­tre that would – among other things – in­clude a BP fill­ing petrol sta­tion. BP liked the idea and of­fered him an in­ter­est-free loan to de­velop the plot.

At the same time Nkuna ap­proached Shell with his idea con­cern­ing his plot to see what sort of deal they could of­fer him. To his amaze­ment Shell bet­tered BP’s of­fer. Play­ing off one against the other, Nkuna re­turned to BP with Shell’s of­fer – forc­ing BP to up their of­fer.

“But the sec­ond time I went back to BP they made sure to make me sign the pa­pers on the spot, be­cause by now they’d cot­toned on to my game,” says Nkuna. “But I think it was that ex­pe­ri­ence that made me re­alise the po­ten­tial of com­mer­cial prop­erty and how valu­able it was. And from then on my eyes were open.”

Nkuna’s small con­ve­nience cen­tre opened in 1986 and be­came the first or­gan­ised shop­ping out­let in Soweto. Pre­vi­ously the town­ship had only scat­tered cor­ner shops that had mush­roomed all over the place. He soon de­vel­oped sim­i­lar projects around Soweto.

As a re­sult of his suc­cess with his shop­ping cen­tres Nkuna de­cided that he would build a mall. He ap­proached OK Bazaars to be his an­chor ten­ant. The com­pany asked Nkuna to con­duct a de­mo­graphic study to ex­plore the vi­a­bil­ity of such a ven­ture. It re­vealed that though the de­mo­graph­ics of the area were in Giyani, fi­nanced by Absa bank.

Then in 2004 Ned­bank ap­proached Nkuna and asked him if it they could tap into his rare and in­valu­able ex­pe­ri­ence in town­ship prop­erty de­vel­op­ment and part­ner with him to ac­cel­er­ate com­mer­cial and re­tail prop­erty de­vel­op­ment in pre­vi­ously dis­ad­van­taged ar­eas. To that end, Masin­gita Prop­erty In­vest­ment Hold­ings (MPIH) was formed. Nkuna held 65% of its eq­uity and Ned­bank the re­main­ing 35%.

In 2005 MPIH built Bara Mall and then – in Oc­to­ber last year – Nkuna’s long-cher­ished dream was fi­nally re­alised when Jab­u­lani Mall opened. “Jab­u­lani was the first full ser­vice shop­ping mall in Soweto and broke many records. It was 45 000 square me­tres with 110 ten­ants, a num­ber of which were ma­jor na­tional brands like Wool­worths, Tru­worths, Game, Fos­chini and many more,” says Nkuna. Jab­u­lani is owned jointly by Re­silient and MPIH, which hold 55% and 45% re­spec­tively.

Since Jab­u­lani, sim­i­lar prop­erty de­vel­op­ments are un­der way, such as the Maponya Mall, cur­rently be­ing de­vel­oped in Soweto.

How­ever, it’s widely ac­cepted in the in­dus­try that Jab­u­lani broke “prop­erty de­velop-

I think it was that ex­pe­ri­ence that made me re­alise the po­ten­tial of com­mer­cial prop­erty and how valu­able it

can be. And from then my eyes were open.

fact ideal, the then po­lit­i­cal in­sta­bil­ity and the per­cep­tions of the pop­u­la­tion con­cern­ing shop­ping in Soweto were ob­sta­cles.

“The re­searchers found that black peo­ple at the time still be­lieved that any­thing sold in the town­ships was in­fe­rior to what they could buy in town.

The study pre­dicted it would take about 15 to 20 years be­fore the mind­set would be ready to sup­port such a ven­ture. Sure enough, that’s ex­actly what hap­pened.”

Nkuna then de­cided to de­velop shop­ping cen­tres in rural ar­eas where peo­ple were then trav­el­ling on av­er­age be­tween 150km and 200km to do their shop­ping.

In 1990 he moved his fam­ily to Giyani to be closer to the projects that he was de­vel­op­ing there. He de­vel­oped two shop­ping cen­tres in ment” ground by be­ing the first mall in a town­ship to in­clude ma­jor na­tional brands as an­chor ten­ants and thus set a prece­dent that oth­ers could ex­pand build on. In March this year Masin­gita opened an­other mall in Giyani and it’s now in the process of build­ing an­other one of 15 000 sq m in Diep­sloot.

Dur­ing the course of his ca­reer, Nkuna de­vel­oped seven prop­er­ties on his own and an­other four us­ing the MPIH ve­hi­cle. And he shows no sign of slow­ing down. “I’m look­ing at align­ing my­self with a ma­jor listed prop­erty com­pany and part­ner­ing with them to build more com­mer­cial as­sets. I’m cur­rently in dis­cus­sions with one com­pany to ac­quire a sig­nif­i­cant stake,” says Nkuna.

Build­ing dreams. Mike Nkuna

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