South Africa’s government is the country’s largest property owner, yet historically its vast real estate portfolio has not been managed with the discipline required of institutional landlords. Thousands of buildings and extensive tracts of land have often been poorly maintained or underutilised. 

John Jack, CEO of Galetti Corporate Real Estate, says this could change with the establishment of the government’s South African National Property Company (SANPC). 

Recently announced by Cyril Ramaphosa, the proposed state-owned entity will oversee a property portfolio estimated to include around 88,000 buildings and roughly five million hectares of land valued at approximately R155 billion.

“If SANPC introduces professional asset management and commercial discipline, it could unlock substantial long-term value for the state while improving the condition and productivity of public buildings.”

However, Jack notes the transformation of such a vast portfolio will not happen overnight, stating: “Government property assets are incredibly complex to manage, and restructuring a portfolio of this scale could easily take a decade before the full impact is felt. In the immediate term, the market is unlikely to see significant change, but over the long term, there is potential to unlock substantial value.”

He shares his insights on the long-term benefits of the proposed property management portfolio:

Key Benefits of a National Property Company
Operational Efficiencies
The government faces a maintenance backlog estimated at nearly R30 billion, while departments spend around R6 billion annually on leasing office space from private landlords, despite many state-owned buildings remaining vacant.

“Redirecting a portion of that lease expenditure into maintaining and upgrading government-owned buildings would be a logical fiscal step,” says Jack. “Instead of paying rent externally, the state would be reinvesting in its own assets and extracting far greater long-term value.”

He notes that one of the key questions will be whether the government commits the capital required to restore neglected assets: “If departments are expected to move back into state-owned buildings, those assets will need meaningful refurbishment. That requires investment, but it could also create positive knock-on effects for construction, infrastructure upgrades and local economies.”

Reports indicate that under the proposed structure, the SANPC will serve as an active asset manager, while the Department of Public Works and Infrastructure will remain the constitutional custodian of state property. 

“Strong governance will be absolutely critical if the government wants to overcome challenges that have historically plagued state-owned entities,” he says. “For SANPC to succeed, it will need genuine commercial discipline and transparency.”

A Potential Sovereign-Style Asset Platform
According to reports, the government has indicated the property portfolio could eventually become a sovereign-wealth-style investment platform, converting state-owned real estate into a revenue-generating national asset.

“The concept is to move away from public property being simply operational infrastructure,” Jack explains. “Under SANPC, it could become a strategic financial asset that actually generates returns, which will attract investment and support large-scale development. This would be a significant shift in how government property is positioned within the broader economy.”

The proposed financial model includes three primary funding streams: 
Accommodation fees paid by government departments occupying state-owned buildings
A development fund to raise capital for specific investment portfolios
Project financing through Public-Private Partnerships (PPP) structures

“Managing a portfolio of this magnitude requires specialised expertise in development, financing and asset management,” says Jack. “To unlock the full potential, the government needs to work closely with the private sector using the latest technology and systems to operate property portfolios efficiently.”

Urban Regeneration and Investment Potential
The SANPC could also support urban regeneration, particularly in struggling central business districts in Durban and Johannesburg. 

“Public-sector buildings are often located at the heart of major economic nodes,” says Jack. “If those assets are refurbished, they can help catalyse wider investment and restore confidence in surrounding precincts. This could unlock meaningful economic value that stimulates private-sector participation.”

Recent reports indicate that the government has already outlined an investment portfolio, including the redevelopment of 13 government office precincts covering approximately 2.39 million square metres of space, as well as harbour upgrades, the redevelopment of state land and the modernisation of police stations, courts and other public service facilities.

“Large-scale public property developments of this nature create substantial knock-on benefits for the broader economy,” Jack notes. “They stimulate activity across the construction sector, professional services such as architecture and engineering, and a wide range of property-related industries, while also attracting further private investment into surrounding areas.”

Potential Impact on Office Market
While the proposal could improve the management of public assets, Jack says the private property sector may feel some ripple effects: “Government tenants occupy a significant portion of B- and C-grade office stock and if departments consolidate into state-owned buildings, it could create increased vacancies in those sectors. However, these strategies take time to implement, so any market changes would likely unfold gradually over several years.”

He also points out that government-owned buildings themselves are unlikely to distort pricing in the short term: “Historically, dealing with government as a tenant is complex and highly regulated. State-owned buildings typically operate at market-related rental levels rather than discounting, with a shift away from restrictive leasing policies.”

In conclusion, Jack notes: “The concept itself has real merit. South Africa holds an enormous amount of public property that, if managed properly, could generate value for the state, stimulate development across multiple industries and support economic growth.”