PARIS-The French government is aiming to sell 6% of its total building stock over the next three years as it seeks to cut its ballooning fiscal deficit. Budget Minister Francois Baroin announced a plan to offload 1,700 of the government’s 28,000 property assets in total.
Many of the sales will come from local and decentralized services where Baroin hopes to get rid of 750 buildings or 5.4 million square feet of office space. The planned sales are one of the key measures in a plan to bring down the public deficit, expected to reach 8% of GDP this year, to 6% in 2011 and 3% in 2013. “The government’s wants the state to have a property portfolio which is more contained, better adapted to its tasks and more economic for the public purse,” said Baroin.
The sales target is ambitious, particularly in current market conditions, and compared to recent targets. Over the past three years Paris has only been able to reduce the amount of space occupied by two million square feet out of a total of 129 million square feet in public sector ownership. “That is still not enough and we are a long way from the target set of 129 square feet per civil servant,” said Baroin.
The government has raised $3.7 billion from property sales since 2005 but receipts fell well short of expectations in 2008 and 2009. Sales totaled just $344 million in 2009 compared with a target of $1.47 billion, and the $1 billion objective set for 2010 may also be difficult to achieve. Plans to sell the defense ministry Paris buildings to a single buyer for around $855 million have failed. Baroin is also looking to cut the cost of buildings leased by government.
“It would be irresponsible for government departments to continue leasing offices at too high a price, so in Paris I will refuse any rent above $45 per square foot.,” he said. The economy and budget ministries are planning to save $27 million by relocating 55% of their staff to offices outside of Paris.
Allan Saunderson is a managing editor of Property Investor Europe and a contributor to GlobeSt.com.
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