Johannesburg - The broad contribution of property entrepreneurs to job creation and the fiscus is often underestimated.
“Shopping centre development, in particular, is a major job creator,” said Sisa Ngebulana, chief executive of the Billion Group, a property development group that is aimed at making a difference in previously disadvantaged areas.
The group recently listed the Rebosis Property Fund with assets of R3.8bn. This is the first black-managed property fund with significant black shareholding to make its debut on the JSE.
Ngebulana however emphasises that the Billion Group is not a typical empowerment company. The company has been developing property since 1997 and, in contrast to some leasing deals where a government leasing contract is necessary to ensure financing, the group owns its own buildings as well as large tracts of land acquired over the years across the country.
Some of the shopping centres developed by the Billion Group in the past couple of years have led to thousands of jobs. Mdantsane City in the Mdantsane township in East London, valued at R500m and with 38 000m² of retail space, gave rise to 1 500 permanent jobs.
Ngebulana said all the national retailers sprang to take up space in the centre and it was fully let from day one.
The centre contributes R128m annually to the fiscus and, he said, has been the ideal investment in a township. “Who would have thought that an investment in a township could be so beneficial?”
The company’s flagship 80 000m² shopping centre, Hemingways Mall in East London, valued at R1.5bn, created 2 500 post-construction jobs. “The centre's annual contribution to the fiscus is R278m and it would not have been possible without any entrepreneurial spirit.”
Ngebulana said there had been aggressive competition from large players in the commercial property sector to develop the centre and he was proud that his company had succeeded in buying the premises from Tsogo Sun.
The Billion Group has impressive development prospects for projects worth R25bn over the next 10 years on land the company already owns.
Rebosis has a strategic connection to the Billion Group, which will enable the fund to acquire attractive development assets at reasonable prices without investors being exposed to any development risk.
One of the developments where foundation work will start at the end of October is Forest Hill City, a huge R7bn development for mixed use south-west of Pretoria. The project will include a 70 000m² shopping centre and more than 80% of the tenants will be national retailers.
Ngebulana said the potential for the centre was premised on 112 000 households living within a 10km radius of the project.
Another development in prospect is the 90 000m² Bay West Mall just outside Port Elizabeth, which will form part of a development for mixed use.
He said this project is expected to create 7 000 jobs in the construction phase and make an expected R320m contribution to government’s fiscus. Ngebulana reckons there is room to develop new shopping centres, but a developer’s skill lies in recognising opportunities in areas where the need exists, such as in the west of Pretoria.
The Billion Group plays only in the regional and super regional centre arena, because it believes there are far too many neighbourhood and convenience centres.
Ngebulana, who has an LLM degree, said that from his childhood years building had been something he wanted to do. He was raised by his grandfather and grandmother, who had a brick business. “I wanted to be in big business, but realised that I would have to build my own property business, brick by brick.”
He was initially involved in developing luxury homes in the northern suburbs of Johannesburg, where he literally bought a piece of ground, built a house on it and sold it. He first used bank finance, but after his fourth house he was able to use his own cash.
But Ngebulana found the residential development industry to be cut-throat and turned to commercial development. “Big developments excite me.”
He said government was an important client and the group was busy with four office refurbishments for government tenants.
“The long rental contracts that government enters into with property owners makes it a favourable proposition for any property player to have exposure to government tenants.”
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