South Africa is drawing on expertise from Gulf sovereign wealth funds as it develops a new state-owned company to manage a government property portfolio valued at approximately $9.5 billion.
Public Works Minister Dean Macpherson said Middle Eastern sovereign wealth funds had advised South African officials to establish a fundraising vehicle capable of attracting capital into the portfolio.
Authorities have also consulted the Johannesburg Stock Exchange over the possibility of establishing a development fund.
The initiative is linked to the planned South African National Property Company, announced by President Cyril Ramaphosa in February.
88,000 Buildings Under Management
The proposed company will oversee an enormous public property portfolio comprising approximately 88,000 buildings and five million hectares of land.
Rather than viewing those assets simply as government properties requiring maintenance, Pretoria wants to explore how they can be better managed and potentially used to support investment and development.
The scale of South Africa’s infrastructure requirements makes private capital particularly important.
According to the figures supplied, meeting the country’s infrastructure ambitions could require roughly $98 billion in public investment and $196 billion from private companies by 2030.
Government finances alone cannot cover the entire requirement.
Gulf Funds Offer Investment Experience
Sovereign wealth funds in the Gulf have become significant global investors in property, infrastructure, technology and other long-term assets.
Their experience structuring large investment vehicles could provide lessons for South Africa as it considers how to attract institutional capital into state-owned property.
The proposed fundraising vehicle could potentially create a structure through which private investors participate in selected projects without requiring the state to directly finance every development.
However, turning a large government property portfolio into an investable platform will require credible governance, asset valuation and clear commercial structures.
The government’s next steps towards formally launching the company and determining its investment model will therefore be closely watched.
