The Public Works and Infrastructure Minister and the MP of DA, Dean Macpherson, outlined on Wednesday how the property investment vehicle announced by President Cyril Ramaphosa during SONA last week will operate.
Macpherson said Ramaphosa had stated how the ring-fenced, professionally governed platform will consolidate income-generating and strategically located assets.
It will also reform the revenue model by reducing billions of rands in lease costs and unlock value within the state’s R155-billion property portfolio for reinvestment in frontline infrastructure such as police stations, courts, and clinics.
Billions spent leasing buildings
Macpherson said this as he delivered his speech on the second day of the SONA debate held at Nieuwmeester Dome, Cape Town.
“Last week, we welcomed the announcement by the president that will fundamentally change how this country manages its public assets, the establishment of a property investment vehicle,” he said.
“For decades, South Africa has owned the largest property portfolio in the country—yet too many assets stand vacant, vandalised, hijacked, or underused.”
The minister also said that the state spends up to R6-billion every year leasing private buildings.
“We own prime property that stands vacant. Yet we pay rent for plush offices. We hold strategic land parcels in the metros while people live in informal settlements.
“We sit on an enormous asset value base, yet we don’t generate any revenue to fund asset maintenance. These contradictions end here.
“The truth is [that] the current model was never designed to build value, making reinvestment in maintenance and upgrades almost impossible. The result is predictable [through] decay, inefficiency, and lost opportunity,” he said.
The minister went on: “The South African property investment vehicle changes that logic entirely and flips the script on unrealised property asset values, maintenance and investment.
“It introduces the best in asset management, development finance and property development. It establishes a verified, digitized asset register, [with] a single source of truth covering ownership, condition, leases, valuation and performance.
“For the first time, the state will manage its property portfolio with real-time data, not fragmented spreadsheets.
“It separates the roles of owner, manager and developer, introducing professional property management expertise to run leases, maintenance of assets, lifecycle planning and tenant performance with commercial discipline while building book asset value.”
Long-term development rights
Macherson also said that the new model creates structured, long-term development rights that allow private capital to invest in precinct upgrades, mixed-use housing and redevelopment.
“It reforms the revenue model to generate income from these assets to support maintenance. This is how we move from reactive maintenance to planned lifecycle management.
“This is how we reduce the billions currently spent on leases. The vehicle includes a dedicated development capability, funding bulk services and precinct preparation so underutilised land becomes bankable projects.”
He said that clear project pipelines will allow private sector partners and sovereign funds to participate with certainty.
Said Macpherson: “In Tshwane, the government precinct programme shows what this platform makes possible. 30 projects, more than 1-million square metres of development, and roughly R33-billion in Phase 1—transforming lease payments into appreciating assets.
“Phase 1 on its own can eliminate over R400-million in annual lease costs and deliver a portfolio valued between R45-billion and R55-billion once complete—strengthening the public balance sheet instead of draining it.
“Phase 2 expands this momentum. It focuses on the refurbishment of underutilised public buildings—bringing them back to life as productive assets and acting as a catalyst for deeper urban regeneration. It also means jobs.
“Across the delivery cycle, nearly 100,000 direct construction and indirect jobs are projected, with up to R60-billion in broader urban economic activity catalysed in the process.”
