The department of public works’ new property management strategy has shed some light on the spread and weight of the state-owned property portfolio — information that has eluded the market for some time.

Seven years ago, the department valued its property portfolio at an estimated R120bn, but subsequently requested an audit to get a clearer picture of its assets. A new property management strategy document, discussed at a recent departmental indaba, placed leasing deals with private landlords at about R1,3bn in the 2006/2007 financial year.

The document was put in place under the watchful eye of public works minister Thoko Didiza — after failed efforts by Jeff Radebe, the first post-1994 public works minister, and his successor, the late Stella Sigcau.

The department, which administers the state’s fixed property affairs, is sitting on a gold mine, but a corrupt asset register delayed state efforts to trade its portfolio.

Property portfolio managers have been hoping government will liberalise its property management policies.

The state’s portfolio could be used in a number of ways to unlock value, according to Jonathan Smith, a veteran property consultant at Courtwell Consulting. He cites leaseback deals, which could be used to create liquid property portfolios and could benefit black economic empowerment (BEE) significantly. But the department is far from exploiting the value of its portfolio, says Smith.

He suggests that the department create a property management agency, which could be run on a commercial basis.

The department owns 240038 buildings, of which 163036 serve as offices and living quarters. It has 77002 land parcels. These are spread across the country, with Durban featuring the largest number of land parcels at 16349. Cape Town has 11710 of these parcels, Johannesburg 10603 and Pretoria 4410.

Durban also has the largest number of state-owned buildings, at 25544, followed by Cape Town at 17650. Pretoria features 11459 buildings and Johannesburg has 10584.

The department maintained leasing deals with private landlords, valued at about R1,3bn in the past financial year. Pretoria, being the home of national government, claims the lion’s share in the state’s leasing deals at R574m in the 2006/2007 financial year. It is followed by Cape Town, which recorded R121m worth of leases, and Johannesburg at R116m.

Didiza, who was shifted from the land affairs portfolio following the death of Sigcau in 2006, has started a new process with new promises. Her strategy has already created excitement, particularly within BEE circles. But sceptics fear it might take another decade for the state to liberalise its property portfolio because of poor management and a lack of skills. - Sibonelo Radebe

Source: Financial Mail