RESEARCH PROPOSAL

Module Code: PMIR 7902 (INDR 7902)

Module Description: Introduction to Research

An evaluation of the disposal process of underutilized buildings

owned by the State in the Durban Central Business District
1. Introduction...............................................................................................................2
1.1 Background...........................................................................................................2
References.....................................................................................................................6

1. Introduction

The proposed study investigates the effectiveness of public property management of

the vacant and decaying state buildings, located in the Central Business District (CBD)
of Durban. For the purpose of this study, all Government Departments and State-
Owned Entities are collectively called the Public Sector. In South Africa, all the State
State-owned immovable assets are regulated under the custodianship of the
Department of Public Works, at both National and Provincial spheres of government.

1.1 Background

In South Africa, the Department of Public Works’ sole mandate as per the Government
Immovable Asset Management Act 19 of 2007 (GIAMA) is to manage all the
immovable assets of all Government Departments and Entities. The Department of
Public Works as is the main custodian of state-owned immovable assets, the biggest
property portfolio in the country (Loopoo, 2018) & (Moleko, 2017). According to the
Department of Public Works, (2016) the said largest property portfolio is currently
underutilized and evidence of vacant /unused properties, vandalized and invaded
properties hasve have been recorded, this is due to lack of maintenance and poor
asset planning of the DPW, cite (Loopoo, 2018). The mismanagement has led to the
financial losses and the user departments failing to render the required service
delivery to the communities, subsequently, forcing the user departments to opt for
leased accommodation of office space from the private sector, which is additional debt
on State (National Treasury) (Loopoo, 2018) & (Moleko, 2017). (Loopoo, 2018) state
that the challenges are the results of the “reactive management approach which the
Custodian has been operating under before the introduction of the turnaround strategy
and the Property Management Trading Entity (PMTE), the entity/agency for the DPW.

There is a need for property management strategy to address accommodation needs

by the user departments which could result in improvement of the national
departments (National Treasury and Department of Public Works) efficiencies in
expenditure on service delivery while also improving the property life-cycle (Loopoo,
2018). The state’s asset portfolio could be utilized to promote the strategic approach
while meeting the service delivery requirements, cites (Moleko, 2017).

The Real Estate Management policy’s initial aim was based on the public interests
and less on economical motives but the non-profit margin increases have shifted and
putting the financial constraints on the Public Administrators/Authorities and as a
result, created the need to view asset portfolio as an economic asset and a reliable
source of income, argues (conference paper). In the modern economies globally,
there has been a wide transformation of public administration where government
divisions have been granted extensive competencies, including ownership and control
over public properties (Wojewnik-Filipkowska et al., 2015). Furthermore, Public
Administrations have slowly changed from being the source of costs/expenditure to a
revenue source, slowly adopting and improving how the public real estate assets are
managed to curb persisting problems associated with Public Asset Management
(Wojewnik-Filipkowska et al., 2015). Many organizations have recognized that
immovable asset portfolio could be one of the largest operational cost for
organizational profit and yet the management of such asset portfolios are not well
structured, argues (Moleko, 2017). The focus has created the need to assess the
effectiveness of the property management tools and the development of the strategic
approach for property portfolio and service delivery by the government (Moleko,
2017).

(Trembecka, 2021) cites that cite that all authorities are mandated to manage the
public asset portfolio in a legal and rational manner, making the necessary
assessments on profits and losses of the asset portfolio they own to inform the
decision making process regarding the organizational needs where non-core assets,
unused and redundant assets should be highly considered for divesting/disposing to
generate the needed income for the organization and possible future investment
(Vermiglio, 2010) & (Trembecka, 2021). Authorities with large public asset portfolio
have an advantage tool to bargain with when faced with financial constraints to
improve their revenue base and expenditure through divestment of its own real estate
assets (Vermiglio, 2010). The budget constraints and underutilization disused of public
buildings which are financially unsustainable have forced many States to pursue the
disposal of the surplus properties to increase State’s revenue, affirm (Tajani and
Morano, 2014).

(Moleko, 2017) cites that for the state to have an effective cost approach there should
be a strategic approach in place for property management portfolio to be viewed as a
source of revenue that promotes productivity. Building from this argument on how
public property portfolio can be utilized as a source of revenue, the empirical research
method is explored within the sub discipline (property disposal) of public property
management.

In the subject of (Yoon and Lee, 2019) the importance of sustaining the old and
unused buildings is considered to be non-core to the Public Administration but have
the heritage value. The study posits that there is a need to The importance of the
study is to bring balance between the old decaying infrastructure and regeneration of
such areas through the adoption of a disposal framework to inform the disposal
process while upholding sustainable principles (citation). The analysis of
frameworkanalytical framework adopted for the historical/heritage buildings can be
used in assessing the underutilized/old buildings in the disposal processes. The
utilization of the PPP skills (Tajani and Morano, 2014) shows that as evidence of
budget constraints and the disused public buildings becoming more financially
unsustainable, existing legislations within which the leasing or sales of public
properties are regulated, must be explored to enforce detail feasibility studies to best
enhanced the old properties to mitigate challenges of non-sales/leasing. (Wells, 2014)
tackles the issue of Public Property Disposal Strategy, where public property sales
could be used as a strategy to dispose public property in response to the urban
development programs which are aimed at promoting “profit-orientated” real estate
development while increasinges tax revenue. On Public Property Management
principles, (Maletswa and Boshoff, 2015) under the DPW, best practices are not
applied when leasing state properties. The state properties are not well managed in
comparison to the private real estate practices. The leasing practices of public sector
need to be informed by the best strategies in order to compete in the open market to
generate revenue. The investigations of Loopoo, 2018 based the main challenges of
the Department of Public Works to the “reactive management approach”, which
resulted in the adopting the Property Asset Management Strategy that seeks to move
towards “profit and service delivery” driven department. (Wojewnik-Filipkowska et al.,
2015) opens the discussions around the PREAM and how to improve for the benefit of
public entities by exploring more on CREAM approach of being profit driven. The
publication Trembecka, 2021, make analysis of the disposal processes of public
properties in determining the scope of properties conducted the disposal process
during 2017-19, looking at the methods applied and profits made. (Moleko, 2017) calls
for the transformation of the State Custodian, DPW by adopting the Corporate Real
Estate Management (CREM) to better manage State property portfolio.

The aim of this research is to evaluate the disposal process of the DPW at the
provincial level, to determine the necessary steps taken into the decision-making,
what criteria is used and what are the limitations that delay the process. The envisage
that the findings from this research will contribute to the growing discussion of public
property disposal as alternative for adaptive reuse of the unused buildings to reclaim
the decaying the inner cities.

References
Loopoo, V., 2018. Maletswa, G., Boshoff, D., 2015. An analysis of the quality of
property-management principles in the South African public sector - a focus on
residential property : research article. Acta Structilia J. Phys. Dev. Sci. 22, 22–
44.
Moleko, T.V.Q., 2017. TOPIC: A REAL ESTATE MANAGEMENT FRAMEWORK FOR
THE PUBLIC SECTOR IN SOUTH AFRICA. 97.
Tajani, F., Morano, P., 2014. Concession and lease or sale? A model for the
enhancement of public properties in disuse or underutilized 11, 14.
Vermiglio, C., 2010. PUBLIC PROPERTY MANAGEMENT FOR ITALIAN
MUNICIPALITIES. FRAMEWORK, CURRENT ISSUES AND VIABLE
SOLUTIONS, in: Proceedings of the 17th Annual European Real Estate Society
Conference - Milan, Italy. Presented at the 17th Annual European Real Estate
Society Conference: ERES Conference 2010, ERES, Milan, Italy.
https://doi.org/10.15396/eres2010_275
Wells, K., 2014. Policyfailing: The Case of Public Property Disposal in Washington,
D.C. 22.
Wojewnik-Filipkowska, A., Rymarzak, M., Lausberg, C., 2015. Current Managerial
Topics in Public Real Estate Asset Management. World Real Estate J. 5–10.
Yoon, J., Lee, J., 2019. Adaptive Reuse of Apartments as Heritage Assets in the
Seoul Station Urban Regeneration Area. Sustainability 11, 3124.
https://doi.org/10.3390/su11113124