The approach to portfolio management for public sector owners is inherently different than private sector real estate holdings. With respect to the various levels of governmental jurisdiction (i.e. municipal, provincial, federal) there are many common features in portfolio management that are universally applied as noted below. The most important component to bear in mind however while making any real estate decision is how taxpayers’ money is used.
There are two primary and common features in public sector real estate portfolio management. The first is that every jurisdiction administrates in terms of budgetary constraints. The second feature is that the real estate assets are to serve the interest of the citizens of that jurisdiction. In the former, budgetary constraints differentiates between real estate being an economic good as opposed to a free good; the appreciation of the concept of scarcity. In the latter, sometimes serving the interest of the citizens becomes secondary to protecting departmental budgets.
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