The Gauteng provincial government is paying rent of R34m a month to house its 11 head offices in the Johannesburg CBD — even though it owns 41 buildings across the province, all of which remain vacant.
This means the provincial government has been spending more than R400m a year, and about R2.2bn in the last five years, to house its political heads, including the premier and his 10 MECs.
The vacant Gauteng buildings are said to be in poor condition and have been declared uninhabitable, resulting in the provincial government having to lease office space from private owners.
These revelations come as the country grapples with skyrocketing expenditure and is scrambling to fund its budget.
The shocking figures came to light this month when infrastructure & development and co-operative governance & traditional affairs MEC Jacob Mamabolo was asked a question in the provincial legislature about how much the provincial government was spending on rent.
Gauteng’s department of infrastructure & development, responsible for the payment of the rentals, has blamed insufficient funding for the maintenance and refurbishment of its own properties as an excuse for the additional expenditure, saying there has been a prolonged period of noncompliance with occupational health and safety (OHS) standards.
The department believes lack of maintenance has resulted in the deterioration of its own assets, which are primarily office buildings, compromising their overall condition and usability. It added there were compliance issues and safety concerns expressed by workers that could not be ignored.
In 2017, former Gauteng premier David Makhura had to vacate his own workspace after a fire broke out as a result of an electrical fault at the inner-city building housing the office of the premier. A year later, eight other buildings housing several provincial departments — including e-government, the treasury, roads & infrastructure, and social development — were closed down for not meeting OHS standards.
At the time, provincial head of communication Thabo Masebe said they could not say what the financial implications of this move would be for the province.
A report, which the Sunday Times has seen, has since detailed rental expenditure in the 2019/20 financial year of R393m — a bill which rocketed to R458m in the 2023/24 financial year.
Mamabolo explained that infrastructural deterioration had forced the department to explore alternative solutions, including leasing properties from third parties, to ensure the provincial government was able to provide the required office space.
We want a complete overhaul of our properties, as well as an investment in high security, to ensure the area is clean
— Jacob Mamabolo
He insisted this was just a temporary measure, as the province had its eyes set on a long-term revitalisation of their buildings through a Gauteng Precinct Development project that would need to be funded by a public-private partnership (PPP).
“From time to time you can have challenges with your buildings, as they are at different compliance levels,” Mamabolo said. “We run buildings that have to be fully compliant with [OHS] standards. We have to prioritise safety and security, and that gives great comfort to our staff. If buildings are noncompliant, you have to rent [on an interim basis] because it will take [a long time] to acquire your own buildings or [be] costly to repair the existing condemned properties.”
According to Mamabolo, this grand plan is part of the department’s strategy to restore the Johannesburg CBD to its former glory.
“The seat of the Gauteng provincial government is the Joburg CBD — that’s where the head offices of the various departments are located. In the late 1980s and early 1990s, when it was clear there would be political change in the country, most of the multinationals and big companies that were a product of the good old days of gold mining relocated to Sandton and Rosebank, and other similar areas.
“When they abandoned the CBD during that transition period, the provincial government chose to stay in the downtown area. We then bought some of the buildings being abandoned. The plan was that some of these buildings would be given a facelift, in a bid to save the CBD.”
He insisted his department wanted to invest in the CBD and revitalise it — a move that would require the provincial treasury to source the funds from the private sector. He added that his department’s intention was to secure a huge lump sum and embark on the project all at once.
“We are trying to comply with the complicated requirements of a PPP transaction. We want a complete overhaul of our properties, as well as an investment in high security, to ensure the area is clean. We don’t want to follow a piecemeal approach, in terms of which one building is fixed up today, with security provided here and there, and another space is cleaned tomorrow. We would rather have sustained investment in good buildings in a safe environment that is managed as a single integrated space.”
Though he expressed his concern at the R34m monthly rent bill, Mamabolo said this figure could help strengthen the department’s hand in its hunt for private sector funding to finance its grand plan.
“Currently we are renting, and you can see the figures. We need a good financing model to secure investment by the government in the CBD after the departure of the private sector. We need to be able to give investors and lenders, such as banks and private equity, confidence and assure them of good cash flows and a return on their investment.
“The amount of money we are spending on rent is actually positive to a certain extent. With this money we are spending, we are making it clear we can afford the PPP transaction. As provincial government, we don’t have money in the bank or an equitable share in grants. If we get private sector money upfront to raise capital and solve our building problems, we can pay it back over a period of five to seven years, depending on how much we borrow.
“Every partner is going to want to be certain they will get a return on investment, and that we are not going to default. The monthly short-term rental we are disbursing demonstrates we can pay the private partner back. It will take a long time to finish the revitalisation if we rely solely on those monthly payments and our own resources. We need huge amounts of money at once to sort out, not just our offices, but also the CBD.”
A senior official dismissed the report on Gauteng’s rental payments, saying it was common practice across government, even at the national level, for office space to be leased.
“We have a hybrid model. Some departments will use their own buildings, while others will use rented office space. Even the national department of public works caters for government office-space rental — it’s not a new thing. The reality is that the government does not own enough property to accommodate everyone, so where it’s feasible we use our own buildings, and where it is not we rent.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.