Strategic Property Management

Background

Strategic property management is defined by the Royal Institution of Chartered Surveyors (RICS) as the ‘activity of aligning property assets with the strategic aims and direction of the organisation and adding financial and non-financial value to the organisation as a result’.

The States of Jersey property estate provides an essential platform for public services and Government operations. The estate comprises 867 sites covering infrastructure assets and operational land and buildings.

The public estate in Jersey has a direct relationship to the quality of public services delivered by the States and their contribution to communities and places. The States need to manage their property effectively in order to achieve their strategic priorities and to secure value for money in delivery of public services.

The first Island Public Estate Strategy was published in 2021 to guide the development and management of all Government operational land and buildings (270 sites) under a single corporate landlord model.  Infrastructure assets (597 sites) are managed under separate strategies.

Scope

This audit assessed the effectiveness of the States of Jersey’s strategic arrangements to manage their portfolio of property assets to ensure value for money in the delivery of public services.

The audit considered the performance of the States against the following statements (audit criteria):

• The States have set out a clear vision and strategy for their estate.
• The States have engaged with appropriate stakeholders in developing their estate strategy.
• Clear decision-making, governance and accountability arrangements have been set out to deliver the strategy and are operating effectively in practice.
• Appropriate arrangements are in place to deliver the agreed strategy, including by managing the risks associated with:
  • incomplete, inaccurate and fragmented data
  • insufficient property management expertise
  • unrealistic or over ambitious plans
  • an emphasis on short term gains and a lack of long term planning; and
  • weak financial management.

This audit used a combination of a result-oriented approach (assessing whether objectives have been achieved and services are operating as designed) and a system-oriented approach (examining whether management systems are functioning properly).

The net book value of land and buildings in the States of Jersey Group Accounts at 31 December 2023 was £4.1 billion, excluding buildings under construction. This figure includes States buildings valued at £745 million and social housing managed by Andium Homes valued at £1 billion.

At 31 December 2024 the net book value of land and buildings in the States of Jersey Group Accounts was £4.4 billion excluding buildings under construction.

The audit evaluated the States of Jersey’s overall arrangements and procedures for strategic property management.  It also considered the arrangements for managing operational land and buildings and infrastructure assets.

The audit reviewed how arrangements within the States, including within JPH, integrate with the strategic direction of States-owned entities including Andium Homes, Ports of Jersey and JDC.

The audit included a follow-up of the implementation of recommendations made in my predecessor’s report Operational Land and Buildings (June 2018). It also considered the action taken by the Government in response to the Public Accounts Committee Report (Follow Up) Review of Estate Management 2021 (October 2021).

The New Healthcare Facilities Programme was explicitly excluded from this review, as it is planned to be subject to a separate C&AG audit in 2025.

Conclusions

Key Findings

The States produced their first Estate Strategy, ‘The Island Public Estate Strategy 2021-2035’ (IPES) in 2021. While this was a positive step, the opportunity is now there to develop and improve the Strategy in line with best practice. The implementation plan indicates that much is still to be done to deliver the actions in the Strategy.

The Corporate Landlord model described at the time Jersey Property Holdings (JPH) was established in 2005, and as emphasised in the IPES, has not been universally embraced. As such, estate management remains fragmented across the States.

A full condition survey was completed in 2023 for the first time since 2011 and results are now being collated to provide consideration of a detailed maintenance and renovation plan over the next 25 years.

There is limited transparency on the estate maintenance backlog but the condition of the estate is set out in the public domain: 34% of the estate is categorised as good or excellent, 40% is categorised as between good and fair and 26% of the estate is categorised as fair or poor.

Investment in maintenance in recent years has been at levels below recommended benchmarks. In the absence of a detailed condition survey, the priority has been ensuring safety and compliance which has been reported by officers as achieved.

A project plan and methodology is in place for development of Strategic Asset Management Plans. These are intended to review the existing estate and identify needs at a service level and are a fundamental element of the IPES. However progress has been slower than anticipated. Much of the work on identifying needs, priorities and options is scheduled for 2025. This appears to be ambitious.

New governance arrangements were introduced with the IPES but there is limited evidence that the Corporate Property Management Board (CPMB) is operating strategically as described in its Terms of Reference. There is an opportunity to consider how political oversight of the entire public estate can be enhanced.

There is more to be done to demonstrate that the IPES aligns with other States strategies and those of the States-owned entities.

The States have not undertaken the C&AG recommended review of the States of Jersey Development Company (JDC) to confirm that it remains the most appropriate vehicle and operating model to deliver Government regeneration objectives in the longer term. Options related to potential changes to the future role of JDC have yet to be considered by the States.

Conclusions

A strategic focus for estate management has been very slow to develop since JPH was established in 2005. This is despite a range of internal and external reviews arriving at similar conclusions about the lack of strategic focus. The failure to develop and fully implement a strategic approach to property management is a concern which is likely to have had an impact across the States in both financial and non-financial terms which are impossible to assess.  A vision and strategy are now in place but much remains to be done to deliver the cultural and other changes required to enable the States to demonstrate that their approach is strategic and aligned across the States of Jersey Group.

The approach to estate management and budgeting remains fragmented. Although JPH’s role is described as the Corporate Landlord, in practice this is not the case. Leadership and commitment is required at political and officer level to implement the corporate landlord model if this is still the strategic aim of the States.

A strategic approach to property management requires completion of Strategic Asset Management Plans across the whole estate to match existing assets to what is needed and identify options for future acquisitions and disposals. The output from these exercises should be used to inform dialogue on an Island-wide approach to strategic property management including alignment with the strategic aims of States-owned entities.

Steps have been taken to quantify the maintenance backlog which will provide the basis for future maintenance plans. Investment will need to be at an appropriate level to maintain the estate and reduce the backlog. In time, this may be expected to reduce reactive maintenance expenditure and improve value for money.