Friday, June 11, 2010

The great French govt property sell-off

1,700 sites for sale; revenue will help trim nation's huge debt

PARIS: Fancy setting up house in a French government ministry? Or retiring to a royal hunting lodge?

France is selling off 1,700 government-owned properties, including a magnificent chateau with its own private dock on the shores of Lake Geneva and a 1920 luxury Paris villa not far from the Eiffel Tower.

The real purpose of the super-sized sale is to dispose of dilapidated, expensive-to-maintain buildings, while also chipping away at the country's record-high debt.

The French budget ministry said on Wednesday that its latest sale, part of a programme that began in 2005, will see mostly office buildings, housing blocks and military barracks up for grabs.

Among the properties are chateaux, such as one in Thonon-les-Bains built in 1800 and perched on the shore of Lake Geneva at the foot of the Alps. Another is a royal hunting lodge and guest house built the century before in the Saint-Germain-en-Laye forest west of Paris.

'Buildings unoccupied for many years. Needs restoration,' reads the government's listing for that property.

A huge parking garage located in south-east Paris will be shut down and sold off next year after the state decided to outsource maintenance work on the government's fleet of cars.

Full details of the assets will be released on a website for potential buyers to browse.

Foreigners are welcome to join the bidding, said Budget Minister Francois Baroin - but their cash must be clean.

Any buyer, whether a movie star, foreign government or ordinary taxpayer, will undergo thorough background checks.

This is a sensitive issue at the moment in France, where Panama's former dictator Manuel Noriega is going on trial this month on charges that he laundered cocaine trafficking proceeds via French banks and three Paris apartments bought by his wife in the 1980s.

Most of the buildings and land are located in the French provinces, with some even in overseas territories, part of a massive property portfolio that the state could barely keep track of.

'The state now has a clear picture of what it owns,' Mr Baroin said.

Since 2005, sales of state property have generated more than €3 billion (S$5.1 billion).

Most of the buyers have been local governments, which get priority, and real estate investors.

However, the French government's property sell-off has raised hackles, following reports that some buyers were picking up buildings for a song and reselling them for a hefty price.

The Cour des Comptes, France's quasi-judicial public institution audit office, noted last year that 10 transactions between 2005 and 2007, worth €84.2 million, were later sold by their new owners at a €42 million profit.

The state property managers have since introduced a clause in sale contracts specifying that the government will get part of the profit if the building is sold within two years.

Part of the revenues from property sales is used to fund new construction projects or major restoration work, but about 15 per cent goes to reducing the government's debt.

Mr Baroin said he hoped that this percentage will increase in the coming years.


Source: Straits Times, 11 Jun 2010

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