The battle to get SA’s R117bn property portfolio in safe hands

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Jeremy Cronin. Picture: Jan Gerber
Jeremy Cronin. Picture: Jan Gerber

Management by the state of the country’s largest property portfolio – at R117 billion – is showing signs of a turnaround after being in a shambolic state and prone to abuse and corruption.

Positive signs were acknowledged during a Public Works portfolio committee meeting in Parliament this week. However, concern was expressed by opposition MPs that new minister Nathi Nhleko – who failed to impress them in his previous role as police minister – could scupper the progress that has been made.

Interviewed after the meeting, deputy public works minister Jeremy Cronin said that in 2011-2012, the department itself had been in “intensive care”. The immovable assets register of land and property, a critical instrument for effective property management, had been in a “shambolic state”.

The department has been on a mission to locate missing, illegally transferred, illegally occupied and abandoned properties. It has also put a total value to its lucrative register, which has risen from R100 billion when “completed” a year ago, to R117 billion this year. The register amounts to about 11.7 million hectares of land parcels and 53 million square metres of properties.

The asset portfolio was seven times larger than the next biggest property landlord, Growthpoint, said Cronin.

“We first had to figure out what we owned,” said Cronin. “A lot of funny stuff had been going on, especially in the [apartheid-era] ‘self-governing’ Bantustans.”

Management of the properties had been professionalised under the business-oriented Property Management Trading Equity, which is intended as a catalyst for development and socioeconomic transformation.

“We need to do things that the private sector does when managing and leasing property. State property can no longer be managed in a bureaucratic way … We need to trade,” said Cronin.

The leasing of private land and buildings by the department had also been jacked up in a bid to stop the rot exemplified by the controversial deal with property mogul Roux Shabangu in 2010. Public Protector Thuli Madonsela found improper conduct and maladministration involving a R500 million, 10-year property lease deal with Shabangu for police headquarters in Pretoria and Durban.

Cronin said that in the past the department had “at the very least been a sitting duck for private sector interests due to a lack of skills but also perhaps to corruption”.

Lease agreements were been scrutinised and renegotiated to ensure that the department was not wasting money, acting corruptly or being manipulated by private sector landlords.

Declining to speculate about Nhleko’s plans, Cronin said that in his first budget vote speech as minister last week, Nhleko had “acknowledged that there had been a significant turnaround, and he showed a commitment to continue to build on it”.

MPs were encouraged by the 96% occupancy rate of all properties, but criticised the department for excessive use of consultants.

The department and Property Management Trading Equity together spent R470.33 million (preliminary) on consultants in 2016-2017, down from R507.85 million in 2013-2014.

Cronin told MPs that as capacity and honesty were being built within the department, the need for consultants had been reduced.

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