State buildings in Slovakia are often in bad condition

Public buildings are in poor technical condition and most of them require reconstruction with an estimated cost of billions of euros. The solution may be their commercial sale. This was pointed out by the management company 365.invest, for which PR manager Katarína Dubeňová informed about it.

Inefficiency of the state

“One of the biggest problems of public administration is the lack of preventive investments in the maintenance and renovation of state buildings. “State funds are spent inefficiently, not only when purchasing or renting buildings, but also during their subsequent administration,” said Dubeňová. At the same time, the management company refers to the analysis of the Department of Value for Money from October 2022, which, according to them, indicates that up to 75 percent of state buildings are in a very poor technical condition and require reconstruction.

The management company sees the problem in the lack of model offices, real estate experts or project managers. “Properties, even those owned by the state, will have to follow certain rules and specific parameters for the efficiency and sustainability of the building in the future. The expected costs of these reconstructions are in the billions of euros,” Dubeňová reminded, adding that the public administration usually only reacts to emergency situations, which results in the gradual deterioration of the condition of the buildings. In addition, these buildings are energetically and economically inefficient, which negatively affects not only the state budget, but also the environment.

“However, the recent report of the Supreme Audit Office of the Slovak Republic also points to the lack of coordination between individual departments when renting and selling property. The problem is also the lack of a functional database of real estate owned by the state, as well as a professional central procurement agency for the public sector,” said Dubeňová on behalf of the management company.

Solution for commercial use

According to 365.invest, one of the solutions can be the use of suitable commercial premises, which could serve as an alternative to the current state buildings. “Optimization can be financed from saved funds, but also through the sale of poorly used or unnecessary state buildings,” explained Dubeňová, adding that this would not only increase the efficiency of the use of buildings, but also raise funds for investments in their renovation and modernization. .

According to the management company, the cooling of the office real estate market that occurred after the pandemic is contributing to such a solution. The manager of real estate transactions for 365.invest, Tomáš Cár, stated that while in the fourth quarter of 2019 the office vacancy rate in Bratislava was at the level of 8.73 percent, in the second quarter of 2023 it was below 12 percent.

According to him, downward pressure on office real estate prices can also be seen. “The current situation favors tenants, who can choose from a larger offer of available office spaces and can push the owners of the premises to lower rental prices, respectively bigger discounts,” Cár explained.