TIBER CONSTRUCTION
DISCOVERY PLACE
TIBER CONSTRUCTION
Tiber Sits
Sky High In Sandton PRODUCTION: David Napier
Taking advantage of the extraordinary growth happening in Sandton, Africa’s financial CBD, Tiber Construction is firming up its grip on the local industry’s top spot. Managing Director, Jose Correia tells Enterprise Africa that after a difficult 2017, the industry is now showing signs of revival and Tiber is well placed to prosper.
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Last year, amidst a backdrop of economic and political uncertainty, South Africa’s construction industry began to flag. Investment was drying up, money was not as fluid, and projects were being shelved until a level of certainty returned to the market. However, Tiber Construction was deep into a mega project, building the Discovery Building in Sandton. At the same time, the Johannesburgbased construction and development
specialist was busy with the magnificent 140 West project. Where others were dropping tools, Tiber was building nicely. Managing Director, Jose Correia was “cautiously optimistic”. Today, his feeling is much more positive, and a year on from when Enterprise Africa last questioned Correia, he says Tiber remains strong and stable. “In May 2017, the industry was in a tough place and to be honest, it got more difficult throughout the year. We were very fortunate that we had
two very big projects which carried us throughout that period. We secured those projects at the margins of two years before and that was very fortunate from our side. The industry took a massive dip towards the end of the year.” But not all have been so fortunate. “We have experienced a big increase in the number of sub-contractors going into business rescue and liquidation, and the worrying aspect of this is that many of them were reputable business with an established track record in
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INDUSTRY FOCUS: CONSTRUCTION
the industry. There have also been a number of main contractors which have suffered the same fate, which is of major concern, as it reflects the overall weakness of the market. “Towards the end of 2017, there was a lot of negativity in the country from a growth perspective. Overall leadership and accountability has largely been missing as everyone is well-aware, and so new investment into property developments was held back, due to lack of growth prospects and uncertainty. Consequently, projects that we were hoping to start at the end of the year were postponed and that hurt us a little as we had an expectation of turnover which did not materialise,” says Correia. “Fortunately, since Cyril Ramaphosa was elected to the Presidency, there has been a change in sentiment. Since January, we’ve had a positivity that we all last felt in the pre- 2010 World Cup days. Sentiment has improved and this was felt in our market. Some of those projects that were put on hold suddenly started moving again and we have managed to get all of those projects that were looking at last year moving now. It’s an exciting time.” So, business is good for Tiber
// FROM JANUARY, I’VE NOT BEEN IN A SITUATION WITH SUCH POSITIVITY SINCE THE WORLD CUP // but surely this change in feeling is not just down to Ramaphosa? “Strangely enough, it is,” says Correia. “It’s not so much because of the man that is coming in, even though he is pro-business, it’s more about the decay and damage that was being done previously. When the change happened, there was euphoria everywhere; sentiment shot up, confidence shot up, but there was a realisation that he faces several major challenges. I remain positive; everyone is cautiously optimistic. However, with all the positive sentiment, it will take a year or two before it is converted into opportunity.” Correia’s optimism is being repaid. By positioning the 67-year old business as one which can handle projects of any size, but not over estimating its capabilities, management has created a fast moving, approachable, efficient
VIVA Formwork & Scaffolding has over 22 years in the industry. We specialise in the supply, errect and dismantle of formwork and scaffolding in and around GAUTENG. Our onsite management, engineering and safety teams have completed many successful jobs with the toughest structures and tightest of programs. 140 West Street is testament to VIVA Formwork and scaffolding’s capabilities. Teaming up with Tiber & WBHO lead to the successful completion of the super structure ahead of the program.
140 West Street • • • •
70 000 square meters of slabs 8 basements 15 Upper floors (Northern Tower) 16 months
“FORMING YOUR FUTURE”
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builder and developer, located in the heart of South Africa’s business hub. “There are more enquiries, people are sending us more tenders to consider, and there is notably more activity – especially in the Gauteng area. People are still cautious and the market is still cut-throat but he is pro-business and that is good.” POSITIVE 2018 With Tiber’s two major projects from 2017 now all but complete, getting new work underway has been key. Five new projects, all in Gauteng, are particularly exciting for Correia. “Our biggest project right now is a JV with WBHO and that is 144 Oxford. It’s a 33,000m2 commercial, lettable space with fully unitised glass facades – it’s a striking building. We will be commencing with Illovo 96, a 7000m2 gross lettable area commercial building in Oxford Road in May 2018. We are currently busy with a new office development for Abland in Constantia, which will be occupied by Nedbank. That’s a 12,000m2 gross lettable area building, which we are scheduled to complete by November 2018. “We are also breaking ground on the first phase of the 110,000 m2 precinct mixed-use development called Sandton Gate, which is a JV development being undertaken by Tiber and Abland. The first phase is a 15,000m2 P-Grade office development which will incorporate a flagship Planet Fitness gym. The second phase of the development which is a residential component consisting of 142 units, mostly two bedroom apartments, will commence in the latter part of 2018. “This development will take five to seven years to roll-out and provides us with a strong base for our order book going forward. Reliance on the open tender market in today’s times is a sure formula for failure so we continue to focus on ensuring that we continue to build a pipeline of projects through expansion of current relationships with developers and clients.”
TIBER CONSTRUCTION
Sandton Gate is in Tiber heartland, where the company is famous for delivering excellence. This is also an area that in insulated from economic turmoil experienced in other corners
// THERE ARE MORE ENQUIRIES, PEOPLE ARE SENDING US MORE TENDERS TO CONSIDER, AND THERE IS NOTABLY MORE ACTIVITY – ESPECIALLY IN THE GAUTENG AREA // of the country. “The growth forecast for the country is something like 1.5-2% but that is diluted growth for the country,” says Correia. “If we look at Sandton, it’s growing consistently at 4-5% and that is the market we are interested in. We don’t deal in negative and subdued growth – there is growth in Jo’burg and that is the market for us.” REDEVELOPMENT WITH REDEFINE Another key aspect of the Tiber strategy, one that helped it through the bleak 2017, is the company’s ability to perform ‘redevelopment projects’, where a retail centre requires modernising but continues to operate during the refurbishment process. These challenging and unpredictable projects are difficult, but rewarding. Currently, Tiber is at work on phase 3 of the Centurion Mall, south of Pretoria, and the Benmore Gardens Shopping Centre in Sandton. “The challenging thing with these types of project is that you have to work in a live environment and access is very limited, varying from day to day,” explains Correia. “Invariably, these projects get prolonged mainly because of access. Benmore is almost done, we are closing out for the official
completion date of July 18th. We have recently been appointed for the third phase of a multi-million upgrade that is being undertaken by Redefine Properties, the Centurion Mall owner. The current phase runs until February 2019 and it’s incredibly challenging. The challenge is to manage the program in such a way that the stores can continue trading as well as possible in the circumstances. Safety management is also a substantial challenge especially with regard to the public interface with our site activities. As many hurdles as these projects throw up, if managed correctly, they can offer substantial ongoing business. And developing strong relationships with owners of existing retail centres bodes well for long-term strategy. “If you manage these contracts properly, both financially and from an
operations perspective, there are just rewards,” suggest Correia. “We have developed the necessary experience and knowledge during the past few years of being exposed to this type of work with our team going through the previous phases, strengthening our ability to tackle this type of work very efficiently and cost effectively and we will continue to seek out opportunities in this market sector as we anticipate that the trend to refurbish and extend existing successful shopping centres ahead of development of new shopping centres, will continue, given the constraints of the consumer and current trading conditions. “We have developed a strong relationship with Developers in this sector with a substantial amount of work being undertaken for Redefine Properties and we hope that this trend will continue.”
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INDUSTRY FOCUS: CONSTRUCTION
// THE RETAIL BUBBLE IN OUR COUNTRY IS AT A PEAK, A LOT OF THE STORES ARE TRADING WELL ABOVE REALISTIC VALUES, AND THE DAYS OF MANY NEW CENTRES GOING UP ARE BEHIND US // Combine the ongoing projects for Discovery and 140 West with the retail refurbs and it makes for an extremely busy time for Tiber, which is not a listed construction firm and remains a self-proclaimed medium-sized business. But the two mega projects have both been delivered very successfully and Correia is proud. “We completed Discovery Phase 2 in February 2018 and it has been a very successful project. We handed over Phase 1 a couple of weeks early, to the great satisfaction of the Developers, Growthpoint Properties and Zenprop, as well as the tenant,
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Discovery Life. Phase 2 was delivered on time and the tenants have moved in; it couldn’t have gone any better for us. “The closing out of the project and picking up on defects for a project of this size is a whole new project in itself. We have to keep experienced resources behind to close out the project and there’s no revenue for that. 140 West also ended up very well – it’s an incredibly beautiful building. Discovery is a massive building with cutting edge technology but whilst 140 West is a smaller development, it was a more complex and challenging
build. They’re two great projects, that we are very proud to be associated with, both landmark projects in the Sandton CBD.” WHEN ONE DOOR CLOSES Founded in 1951, Tiber’s roots are in both construction and property development. This knowledge has been extremely valuable for clients, and the company’s ability to offer a turnkey service while providing important advice has proved very successful. This is why management has made the conscious decision to not grow into a faceless corporate giant and remain nimble and lean.
TIBER CONSTRUCTION
// IF DOORS ARE CLOSING FOR OTHER COMPANIES, THEY WILL OPEN FOR US // “If you look at the results of the big listed entities in this country, they tell a very sad story. Apart from WBHO, they’re all in trouble,” highlights Correia. “What keeps them afloat is group activity in other areas and in other countries. Their SA building divisions are all struggling. One of the bigger privately-owned businesses liquidated recently and that has flooded the market with employees, so it is a real struggle. “We’ve always believed that
growth in turnover is not growth in profit and some companies have grown to a point that is not sustainable and not profitable. Our strategy has always been to remain lean and mean so that we can handle projects of significant size, but limited to what we can deliver with excellence. We can move quickly, we can make fast decisions, and we can operate more effectively and efficiently because of our size – we are an athletic-sized company.” Because of this type of structure and strategy, Tiber and Correia remain full of positivity, and the business is stronger than ever. “Challenges come and go and you have to filter out a lot of the negativity,” he says. “There are always opportunities. When we finish a building and drive
past it, I love that there is a story there that we have been a part of. We have helped create work for people and created a long-term product that employs people. I love what I do and I believe that where one door closes, another opens. If doors are closing for other companies, they will open for us. “As long as we have the right structure, the right type of clients, and we produce quality at the right price, there will always be opportunities. You are always remembered for the last mess that you made so we make sure we don’t,” he concludes.
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May 2018
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MAY 2018