State property company set to unlock jobs and billions in investment

The government is moving forward with plans to create a new company which will manage South Africa's state property portfolio, estimated to be worth around R155 billion.

The entity will oversee about 88,000 buildings and roughly 5 million hectares of land.

President Cyril Ramaphosa first announced the creation of the South African National Property Company during his recent State of the Nation Address.

The plan, he says, is to bring government-owned property under one structure and to redirect billions of rand which is currently spent on renting private buildings.

Minister of Public Works and Infrastructure Dean Macpherson says his department presented its business case to international investors last week.

“It was very well received, because like us, they see the immense investment opportunity into South African property assets that the government owns that have been underinvested in and underutilised for 30 years."

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The potential capital investment opportunities could be around R150 billion, says Macpherson, and include government precincts, new-build construction, mixed-use residential projects and harbour developments.

"We can only unlock that if we professionalise and commercialise how we view the state's assets."

The government hopes the new entity will unlock value from these assets through development and partnerships with the private sector.

Currently, the government spends around R6 billion on leases, while many of its own buildings, due to neglect and mismanagement, are in poor condition or standing vacant.

"And that's simply because the state cannot afford to take these buildings and assets to A-grade commercial office status."

Macpherson says the job creation potential is also significant, particularly if government precinct developments move ahead as planned.

"I think there's at least 100,000 jobs on the line to be created in the government precinct sector alone."

To listen to MacPherson in conversation with 702's John Perlman, use the audio player below: