If you do that, the rest will come, believes Louis van der Watt. Atterbury’s co-founder shared this and other business insights with Jacques Basson for the Klipkouers business podcast…
Tell us more about yourself.
I was on a born on a farm in the Free State, but spent the first years of my life in Stellenbosch and then we moved to Pretoria, where I have lived for 42 years.
What type of problems does your business solve?
We create buildings: sometimes for a tenant or sometimes a shopping centre. That is basically the problem that we solve – we identify areas where a lot of people live but with a lack of a convenient place to go shopping, because there’s no shopping centre nearby. We find places like that where we can develop a centre, and we follow the same modus operandi for tenants. We’re just erecting a building for Price Waterhouse Cooper, which used to be spread over a number of buildings; consolidating it all so that they are all in one head office. This is more economical for them. We actually consider ourselves to be a team who solve your accommodation problems, whether you’re a person who wants to open a shop or an office, or someone who needs a new warehouse.
What distinguishes you from your competition?
There is a lot of competition out there, but I think what sets us apart is that we are more creative. There’s definitely a strong creative streak in the company to have been able to pull off something like the Mall of Africa. Before we started building there many people drove past the site and never thought of starting anything there until we decided that a shopping mall would work well there. You need a bit of creativity to spot the future possibilities of a piece of land, and then to also visualize the design while you’re at it. I also think our designs are nicer than those of the others because we’re prepared to spend that little bit more. But our biggest advantage is that we have excellent partners. You’ll find that property people tend to want to work alone and own property alone, but we don’t mind entering into a partnership. We’ll approach a landowner and ask him to entrust his land to us in exchange for a share in the shopping centre. That also leads to us being approached by other parties who are attracted to our reputation as good business partners, who offer us their land for consideration. We’re always prepared to do that, which has brought us a lot of business.
Apparently being good partners is not a very South African thing, unlike the Americans, who are. Is this new in SA or do you reckon it has always been like that?
I think it’s all about personalities. I reckon in every industry you get a guy who is comfortable working with others and you get people who aren’t. It just so happens to be our model and for us it’s easy to work with others. They also trust us, and as a result we have been able to close a few property deals that no-one else could. So I believe that’s one of our strong points.
Talking about Mall of Africa… what happens when you spot a good piece of land? Is there someone who does research into urban development and where people move to?
Yes, people think market research is the thing, but we’ve realised that retailers have much better data than any market researcher. We’ll also listen to Checkers, Shoprite, PicknPay or Edgars, as they’ll often tell us they need a site, in, for instance, Warmbaths, and then we’ll go look for one. Many of the areas that we’ve identified have come via requests from retailers. We’d rather let them lead us before we try to lead them!
Why are there so few shopping malls in England, for instance, where the weather is terrible, and so many big ones here where we have great weather?
There are a few answers to that one. Firstly, there is the availability of land – to build a mall of a hundred and thirty thousand square metres you need 20 hectares of land, and you’re certainly not going to find that in London. To be honest you don’t find such sizable pieces of land anywhere in Europe, but South Africa has loads of available land.
Secondly there is the culture of high street shopping which is totally different. Centuries ago you could already walk down the street and do your shopping in London, which you couldn’t do when you went across to Europe. They didn’t have that culture, and during the Communist era, for instance, they’d have one big shop, almost like Makro, where they bought everything, from food to clothes. So in Eastern Europe you’ll find relatively many malls, since there is land available, as it is in Australia, America and South Africa.
How do you go about finding new clients?
I think we have a very good name in South Africa. We find ourselves developing a substantial number of big office blocks because clients approach us. The PwC head office, for instance, came to us through personal relationships. Most of our clients have come to us because people know we’ve been going for a long time and we have the ability to execute. So they’ll come to us and say they need a new office and can we help. Obviously there is also a bit of healthy competition and there are other choices available, but we’ve already won half the battle because clients come to us. Much of our marketing revolves around being in business for more than 20 years, which has built our good reputation, resulting in a lot of business.
In terms of international business – were you proactive in chasing those projects, or not?
Quite by chance we started a transaction in Mauritius and then guys in Africa approached us. And Eastern Europe basically happened in the same way. We had a meeting about something unrelated in Europe, and the man I saw happened to mention that he’d just been to Georgia. I immediately asked him whether there were shopping malls in Georgia, he said no, and that’s why we flew to Eastern Europe… In the end we didn’t do anything in Georgia, but Serbia happened, and from there we got all our international contracts!
What is your take on the opportunities there?
An interesting aspect of Western Europe is that they’re wary of political risks, so they don’t want to develop, but the retailers really want a presence there and that’s why you now want to build a shopping centre in Eastern Europe. You never struggle to find tenants and the tenants are excellent… and there’s no competition as there aren’t that many malls. So it is really easy to set up a shopping mall in a city. Your population is highly educated and they are starting to earn a lot of money, so they want access to “Western” shopping. So the demand is growing.
What is currently, or historically, a big challenge in your business?
Well, I think in the past is was the government interference and the state remains a big problem… every process runs smoothly until you need to rely on them. And it doesn’t matter what it is – whether it’s a land deal or a rezoning – it remains problematic; the guys just have other agendas and different time frames and this causes issues for any developer. BEE is a obviously a big issue, but we implement empowerment no matter the colour of your skin. If you go overseas, or course, it’s different cultures and languages, and you find yourself in a country where you partner with someone who doesn’t even speak English fluently! So you have to work to overcome these challenges, but it also brings about new opportunities, so we tackle the problems and we learn really quickly to work out what’s what and how things fit together in those countries.
I’m thinking of Bucharest where people told me that brown envelopes are alive and well and corruption is still very much a reality. What’s it like to work in that sort of environment?
You know, I believe it’s like that in every country. It depends on the partner you choose. In South Africa we never had to do anything about it because it’s not something we engage in. The first thing we do in such a country – and we’ve been in Africa as well as Eastern Europe – is to pick the right partner. Yes, you do get guys who do it, and guys who don’t, but as long as you have the right partners, it’s not necessary.
What is the biggest business mistake that you’ve made so far?
I think being too relaxed. The other day I told someone that many people become lazy when a company starts to grow, then they start resting on their laurels and suddenly everything starts sliding backwards. I believe it’s the total opposite when a company starts growing, because then you think you can do no wrong and tackle projects that you shouldn’t. I also think that was our biggest mistake, when some of the banks came to us in 2006 with clients who were in trouble. They told us they’d finance us 100% if we’d just take over the projects. In that moment you feel extremely flattered, having the bank come to you and giving you everything you need and all you need to do is to sign on the dotted line, without having to pay a cent. But two or three years later, when the economy is struggling, you’re the one sitting with the debt, and that’s the biggest mistake we made… overestimating our powers.
How do you ensure you don’t repeat that mistake?
You have to learn from your mistakes and we now know not to pick the wrong partner, and specifically not to tackle a project that we’re not a 100% sure of. You do get more cautious. We look around the world for new places to drop anchor… you always have to come up with new ideas.
Who drives innovation in shopping malls?
Funnily enough it’s Australia and South America, but there are brilliant architects everywhere so there are great ideas around. We’re always on the lookout for innovation and our people spot many new ideas and bring them to the table for us to try.
How are you implementing new technology as it improves?
We’ve recently started a company called FATTi, with which we install Wi-Fi in malls that provide free Wi-Fi to customers, but is really used for our own analytical purposes. You won’t believe how much you can learn; so for every person who enters a mall, the Wi-Fi captures their particulars: we might not know who the person is, but the system identifies the cellphone so we can tell that this individual has been in the mall three times this week, generally stays for three hours, and goes straight to the supermarket first. In this way we can establish exactly how many people enter the mall in a week, and how often, and that provides really useful analyses. All of this info can show us exactly what happens in a mall, and where they have mistakes.
How do you handle moments of insecurity and fear?
The team who works with me have been with me from the start and in that group I have three of four whom I trust implicitly. So when I feel unsure they are my sounding board. They are always honest with me and I know who to listen to. You get to know your team and understand who plays which role, and who has the most appropriate knowledge for a given issue. It helps a lot, and gets rid of 99% of your insecurity.
What software or apps are most valuable to you?
I’m not terribly big on technology, but as I just mentioned, I really rate the Wi-Fi application that we have. I think it’s very useful to us, although I personally don’t even have a computer!
What is your favourite quite?
Muhammed Ali said: “A man who views the world the same at 50 as he did at 20 has wasted 30 years of his life.”
How can people reach you?
Email me at louis@atterbury.co.za
The full podcast can be heard here: http://www.klipkouers.com/eps-25-louis-van-der-watt/
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