Dean Macpherson, Minister of Public Works and Infrastructure, said the State currently owns approximately 88,000 buildings and about five million hectares of land, yet many of these assets generate little economic return and in some cases have become a financial burden on government budgets.
Image: Henk Kruger / Independent Newspapers
The government is moving ahead with plans to establish a new State-backed property investment vehicle aimed at unlocking economic value from thousands of underutilised public buildings and large tracts of State-owned land.
This comes as the Department of Public Works and Infrastructure on Tuesday outlined a strategy to transform the way the State manages its vast property portfolio.
The initiative follows commitments made in the State of the Nation Address by Cyril Ramaphosa to better leverage public assets to support economic growth, housing development and fiscal sustainability.
If implemented successfully, the initiative could mark a significant shift in how the South African government manages and monetises one of its largest but least leveraged resources: its land and buildings.
At the centre of the proposal is the creation of the South African National Property Company, a new vehicle that would professionally manage selected State-owned assets and drive commercial development where viable.
Dean Macpherson, Minister of Public Works and Infrastructure, said the State currently owns approximately 88,000 buildings and about five million hectares of land, yet many of these assets generate little economic return and in some cases have become a financial burden on government budgets.
“When I assumed office in July 2024, one of the biggest problems we faced was that these assets were not treated as assets at all,” Macpherson said.
“They had effectively become liabilities that were draining the department’s budget rather than contributing to revenue generation or economic growth.”
Macpherson said the government began reviewing how other countries manage large public property portfolios, examining models in regions such as the Gulf states and Asia.
The research showed that many governments actively leverage public land and buildings to generate revenue, attract private investment and support national development.
“We realised that in South Africa we were doing exactly the opposite,” Macpherson said. “The State has never really looked at these assets as revenue-generating opportunities.”
Another factor driving the reform effort is the large amount government spends leasing office space from private landlords.
According to Macpherson, the government spends roughly R6 billion annually on private leases for office accommodation, despite owning numerous vacant or underutilised buildings across the country.
“There is an inherent contradiction when government is one of the largest property owners in the country but still has to lease so many buildings,” Macpherson said.
The proposed property company will not manage the entire government estate. Instead, it will focus on assets with the greatest commercial potential or strategic importance. The aim is to combine public service delivery objectives with professional asset management to increase the long-term value of state property.
The department's director-general Sifiso Mdakane said the entity will operate under a governance model aligned with the Companies Act and the Public Finance Management Act to ensure transparency and strong financial oversight.
“Our value proposition is based on professionalised performance,” Mdakane said. “We want to move from a simple rental collection mindset to a modern asset management approach that optimises value for the state.”
The new vehicle is expected to focus on several key property portfolios.
The first is government office accommodation, where the aim is to better utilise existing buildings and develop new government facilities on State-owned land.
A second category includes strategic national assets — such as historic buildings and key government infrastructure — that do not generate revenue but must be maintained and protected.
Mdakane said that income generated from other parts of the property portfolio could be used to help maintain these important public assets.
A third area of focus will involve commercially viable land and buildings that could be developed through partnerships with the private sector.
Macpherson emphasised that the government does not intend to sell off all of its assets but will pursue a balanced strategy that includes selective disposals of non-core properties while retaining ownership of strategically important land.
“We are not proposing to dispose of everything and we are not proposing to keep everything,” Macpherson said. “There has to be a balance.”
The initiative could also support broader development goals, including addressing housing shortages in urban areas where large parcels of government land remain unused.
Macpherson pointed to the development of Waterfall City in Midrand as an example of how unused land can be transformed into major economic assets through long-term development leases.
“What started as unused land has become an area that now represents around R100bn in investment,” he said.
Further details on the structure and investment model of the proposed property company will be released as consultations with investors and stakeholders continue.
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