Learning art of war in cutthroat shopping business

SISA Ngebulana has been in the property game for 22 years and founded his company, Billion Group, by consolidating assets in 1998.

Ngebulana began building shopping centres in 2002, initially with Mdantsane City in the township outside East London in the Eastern Cape.

The 90 000m² Hemingways Mall, which he began building in East London in 2007, introduced him to the art of war in malls: who gets the best site and attracts the most shoppers.

In Gauteng, new malls spring up regularly to cannibalise each other, but the building of superregional malls in the Eastern Cape is a long-term strategy.

Ngebulana said it was a challenge to change shopper behaviour, which means Baywest may take six years to become profitable, compared with an industry average of about four.

“It’s good for a fund like Rebosis [Billion Group’s property fund] to get in at an early stage, when rentals are low and income is lower, so as the mall reaches its peak you benefit from the turnovers and leases with turnover percentages.”

Mostly, he said, developers were financially unable to hang on until malls became profitable. “With a big monster like this, sometimes you have to keep ploughing money in. Sometimes developers sell out just as it blossoms and it becomes someone else’s gain.”

Even more important than the exit strategy is the fight for control. “In East London [with Hemingways], I had all the developers in the country with competing projects. We all agreed there could be only one big scheme — that’s what the city warranted.”

Ngebulana beat a variety of developers for Hemingways, and flew national retail CEOs over his site, which was closest to the freeway, to persuade them to come on board.

“I won the rights within eight weeks on the basis of location. But then I had an even bigger challenge . . . not having a contractor to build the mall, because they were occupied with World Cup stadiums.”

So he poached the best construction team from Grinaker.

Ngebulana said. “I was put in a spot. Business is ruthless. If I couldn’t deliver I’d never have been trusted to do another scheme.”

Neil Cloete, who was MD of Grinaker-LTA at the time, said he and Ngebulana had had a chat (after the Grinaker team jumped ship) but there was no bad blood. "That's business - people are hired and leave all the time". Summing up the experience, Ngebulana said: “The challenges seemed insurmountable. It took four months off the 26 months we had to build Hemingways, but we opened on the agreed date. We got it done.” — Brendan Peacock