PUBLIC SECTOR REAL ESTATE ASSET MANAGEMENT MODELS AND THEIR FINANCIAL EVALUATION: THE CASE OF ESTONIA. Presentation at ERES 2013 20 th Annual Conference 3 rd -6 th July 2013 Kaia Kask University of Tartu. The aim of the paper.
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Presentation at ERES 2013
20th Annual Conference
3rd-6th July 2013
University of Tartu
The aim of the paper was to evaluate the financial impact of public sector real estate asset management (PREAM) models on state budget (SB) and government sector account (GSA), using the set of Estonian central government buildings as an example.
Management FINANCIAL EVALUATION: THE CASE OF ESTONIA(PREAM)
Environment(general economy, real estate market)
(state employee)Figure 1.The identification of the research objects.(Source: compiled by the author)
Management strategy FINANCIAL EVALUATION: THE CASE OF ESTONIA
increase of strategic aspect
Real estate environment
increase in number of objects
Figure 2. Conceptual change from property management concept towards corporate and public sector real estate asset management. (Compiled by the author)
GPP – general-purpose property; SPP – special-purpose property
Light green – market rent; Dark green – side costs of the market rent; Light blue – maintenance costs; Dark blue – periodic capital expenditures; Red – one-time capital expenditures.
Lack of information to get the exact numerical measurements for the input data to market-based models (market rentals, etc.).
Adequate basis for the forecasting of market rent up to 30 years.
The amount of the cash-flow to the government sector account (GSA) is heavily dependent on the size of the components of the market rent, which are not exactly measurable. It concerns basically only model 3, but because of that the two market-based models are not comparable with each other.
The concept of corporate real estate management (CREM) used in private sector is well-applicable also in public sector.
The result of the benefit-cost analysis is heavily dependent on the quality of the input data to the PREAM models.
The quality of data is dependant on the governmental information system in general, which is qradually improving.
Currently, based on available input data, only cost-based models are comparable; it is not possible to compare cost-based and market-based models with each other.
From cost-based models, model 3 is the most preferrable to implement, based on the analysis of Estonian public sector buildings.
Final decision about the model preference for implementation should be made, based on single cases, not in aggregated form.