A Better Use For Public Buildings

A BETTER USE FOR PUBLIC BUILDINGSWith many tables, McKinsey tells how decision-makers may obtain good results. A brutal deficit in state budgets is expected in coming years. Interest rates are low, tend to rise, which will worsen the deficit. Surveys point to a deficit of 16-17 percent in most countries.

In the US and the EU there are many public buildings that could have better use. There, the federal administration has 88.5 million m² and leases another 25.4 million. In many cities it is ¼ of the real estate market, as they are in prime locations.

For some nine years, special-purpose vehicles (SPV), issued by the government, insured by their properties, have been used. They are more appetizing to investors than other public securities. This allows Counties and Government to continue to invest in infrastructure, and pay less interest. But their properties are valued at cost, not at current market value.

A professional evaluation showed that in Boston, for example, they are worth 40 times more, in Pittsburgh 70 times more.

“if Portugal followed the example of these countries, it would pay off all public debt in nine years.”

In 2011 New Zealand created the Property Group, to manage all public properties, relocating prisons, schools, agencies, digitalizing more. Rationalized! It saved US$275 million in six years. It allocated several services to the same space, with better service to the public, between services, and less waste.

Australia, Dubai and Sweden are other examples to follow. In Portugal, already in 2005, the government tried to get an updated list of its properties but it was stopped. In 2012 the government tried again, but did not complete it. Why?

An estimate indicated that there were some 55-65 thousand properties, some 9,000 semi-idle, 6,000 in prime locations. For example, in the period of rapid expansion of tourism, the buildings at Praça do Comércio would yield hundreds of millions in long-term leases.

Many countries, such as Sweden, decades ago moved agencies to cities within 2.5 hours by train from the capital. In monthly meetings, today webinars, the bosses make a round trip to the capital on the same day. Public universities went to small distant cities, creating more jobs there, and taking advantage of semi-idle properties. Eight years ago it was estimated that if Portugal followed the example of these countries, it would pay off all public debt in nine years.

 

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