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Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

PARIS-After years of neglecting its real estate assets, the French government is now keen to reorganize the entirety of state-owned property, estimated to be worth just under €50 billion, and to optimize and manage it to boost income and help public finances, says Budget Minister Eric Woerth.

He told a seminar last month organized by the Business Immo magazine that recent changes in public property legislation permit the outright sale of more buildings, and Paris will allow more market influence to determine values. “The state has to stop believing that it knows best, and we are now working with real estate professionals such as notaries, lawyers [and] brokers to determine the best solutions for individual assets,” he told the seminar.

Disposals are part of the strategy, even if sales have been low in recent years. The French state sold €820 million worth of assets in 2007, then just €395 million in 2008–and this year is unlikely to dispose of more than €450 million. Woerth made clear however that the reorganization has now become an important issue for the government, and even if some progress had been made, a lot still has to be done.

Despite that, he added that the state, “is not ready to sell its assets cheaply. If market conditions are not good enough, we will wait”. Historical buildings will also be given special treatment; he indicated that the French state is not keen that these go into foreign ownership.

The new policy direction, adopted recently by the state property council Conseil de l’Immobilier de l’État (CIE), will be implemented by France Domaine, the state property management department lodged in the finance ministry. This department is in charge of enhancing the quality while cutting the cost of public services, and improving the resources and working environment of public employees, Woerth said. CIE President Georges Tron, and other state property representatives, also provided details of changes in state sector real estate policy.

Another objective is reorganization of real estate assets in public ownership: “The state can’t only sell assets; it also has to manage its portfolio of 60 million square meters of which 12 million square meters are offices,” Woerth said. Space reduction is one of the key aims: with an objective of 12 square meters per employee, the state managed to reduce its total use by 60,000 square meters in 2007 and by 77,000 square meters in 2008. “This new real estate scheme will have to be extended to all of France and not only Paris and its region Ile-de-France,” he said, adding that some departments occupied far too large and excessively expensive buildings.

“Transparency and cooperation between the different state institutions will be the key to an efficient real estate policy,” Woerth said.

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