Staff Writer 
The establishment of a new state company intended to serve as a property portfolio and manage around 155 billion Rand ($9.2 billion) of South Africa’s assets is on the country’s radar as a potential path to boosting its sovereign wealth fund.
During the state-of-the-nation address last month, South Africa’s president, Cyril Ramaphosa, announced the establishment of the South African National Property Company, which will assume responsibility for 88,000 buildings and 5 million hectares (12.4 million acres) of land.
The firm, as reported by Bloomberg, will also be tasked with redirecting approximately R6 billion currently allocated by the government to private landlords annually into the development and upkeep of state-owned precincts.
“We think that there is a long-term, value-creation opportunity that almost becomes an anchor of a sovereign-wealth fund over time,” Dean Macpherson, the minister of public works and infrastructure, said in an interview with Bloomberg last week.
According to a brochure regarding the planned national company, extending the portfolio of the new firm to serve as the foundation for a sovereign wealth fund would turn the state’s real estate holdings into a “dividend-paying engine for the nation.”
Despite the government’s majority ownership of South Africa’s real estate, prolonged periods of corruption and mismanagement have resulted in the deterioration or unauthorised occupation of numerous structures.
Coinciding with the proposed management restructuring, increasing concern is being cited regarding the future of central business districts in cities such as Johannesburg and Durban, which have become emblematic of urban dysfunction.
“There’s currently a 28-billion-rand maintenance backlog in public assets that is going to become a problem for the fiscus, because these assets are declining in value,” Macpherson said.
“Something has to be done now to reverse that, or else the value comes down, and the maintenance costs become beyond the point that people would want to invest,” he added.
Per the brochure, renting out state properties could provide funding, but public-private partnerships are thought to be the main strategy to carry out targeted development.
Dean Macpherson also revealed that the government intends to establish a development fund to assist in capitalising the real estate company and raising funds for projects. – Business Insider Africa
