The department of public works is preparing to launch a new state-owned commercial vehicle designed to unlock economic value from the government’s vast but underperforming property portfolio worth an estimated R150bn.
The initiative, formally presented to investors in London at a JSE macroeconomic summit hosted with Bank of America and Investec last week, marks the first serious push since a 1997 white paper, confirmed by cabinet in 1999, proposed a state property company that was never established.
The proposed entity, the South African National Property Company (SANPC), will be structured as a schedule 2 public entity which will enable it to provide commercial agility and insulate decision-making from political interference.
It will focus mostly on commercially viable and socially significant assets operating under delegated authority from the minister and director-general.
“The president [Cyril Ramaphosa] made the announcement at the Sona [state of the nation address]. This now forms the programme of action for government over the over the next 12 months. We have said we need to show substantial progress in the next 12 months to the establishment of the vehicle,” minister Dean Macpherson said during a media briefing on Tuesday.
The state’s properties are depreciating through neglect, with officials from the department estimating R30bn is required to restore them to operational standard, which the fiscus is unable to provide.
The model envisions a mix of asset disposals, shedding non-core properties and public-private partnerships that grow the value of retained holdings over time. The department’s director general-cited the Waterfall Estate in Midrand, developed under 99-year ground leases on previously idle land, as a template.
Benchmarks were drawn from sovereign wealth strategies in the Gulf states, Indonesia, Malaysia and Singapore.
A key priority is addressing the acute housing shortage in urban metros, where the state holds large tracts of vacant and derelict land, including disused military bases, while demand for affordable housing remains critical.
The department will retain constitutional custodianship of all public land and will maintain the National Immovable Asset Register, while the SANPC acts as the operational vehicle for monetisation and development.
“There are about 1,600 we have identified as non-strategic, whether those be single residential properties we sell, we own or sort of a small parcel of land. We are paying rates, taxes, maintenance and security on assets that are nonstrategic to our needs as a department and as a state,” Macpherson said.
“We also appreciate that some of our assets are not in the condition they should be, so we have to offer an incentive to private developers and partners to develop those assets.”
Business Day
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