Annual Report 2008-2009

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OUTPUT 4.1: Property management


On this page: Overview :: Provision of accommodation overseas :: Physical management of assets :: Financial management of assets :: Outlook

The department will manage the Government’s overseas owned estate in an efficient and effective manner.

Key Performance Indicator 2008–09 Target
  • Management of the overseas property estate meets the Government’s property needs, achieves the agreed dividend and return on investment and accords with the principles set out in the Australian Government Property Ownership Framework
  • Maintain building condition to industry standards and meet tenant requirements

  • Plan and implement approved construction and fit-out projects in accordance with Government priorities

  • Pay agreed dividend from the operations of the overseas owned estate to the Government

  • Achieve a rate of return on investment commensurate with risk factors in the overseas environment and the nature of the property

  • Achieve a management expense ratio consistent with external industry benchmarks
  • Overview

    The department’s Overseas Property Office (OPO), which is responsible for managing all aspects of the Australian Government’s overseas owned property estate, continued to provide accommodation for all government agencies represented at overseas posts. Our work covered the construction, refurbishment and maintenance of embassy buildings and the provision of staff accommodation.

    The department applied sound commercial practice to all aspects of property management, in accordance with principles outlined in the Australian Government Property Ownership Framework. We maintained the value of the Government’s property assets, paid a dividend to the Government and achieved a management expense ratio consistent with industry benchmarks.

    We continued our close cooperation with the Department of Finance and Deregulation on the policy framework that governs our work on property issues overseas.

    The difficult international security environment continued to pose significant challenges in our management of overseas property. The department ensured that new projects in the overseas estate complied with security requirements. We achieved a rate of return on investment commensurate with risk factors in the overseas environment and the nature of the property.

    Provision of accommodation overseas

    In 2008–09 the department managed owned properties in 61 locations, valued at $1.717 billion at 30 June 2009.

    By managing a mix of owned and leased properties, the department met office and staff accommodation requirements of agencies representing the Government’s interests overseas. We consulted closely on overseas property management issues, for example on the provision of suitable office space, with government agencies represented at our overseas posts.

    The overseas leased estate, comprising property leased from private landlords by the department and other agencies, is funded from departmental appropriations. OPO provides management oversight of the leased estate (see Section 3 for information about the department’s leased estate).

    Physical management of assets

    We maintained our program of continuous assessment of overseas property through annual inspections by facilities managers and consultation with post management and attached agencies.

    In accordance with industry standards, the department determined priorities for upgrading and refurbishing properties under a five-year rolling program for the owned and leased estates approved annually by the senior executive. Acquisition and disposal of properties was implemented in accordance with the Australian Government Property Ownership Framework and the provisions of the Lands Acquisition Act.

    We developed and managed significant construction and refurbishment projects in the overseas owned estate, enhancing its quality and long-term value (see output 4.2 for information on these projects).

    Portfolio condition

    The department assessed the overall condition of the overseas owned property estate in 2009 as good measured against industry-based benchmarks. New construction works and refurbishments carried out by the OPO, cyclical maintenance and compliance programs have continued to improve the condition of the estate.

    Tenant satisfaction

    OPO assesses tenant satisfaction with the delivery of property management services by United Group Services Pty Ltd (UGL). The performance of UGL was assessed as satisfactory throughout the year.

    The department ensured that the service provider maintained close liaison and effective working relations with tenants and that property management services were delivered to agreed standards.

    Financial management of assets

    The department manages the overseas owned estate through the operation of a Special Account established by the Minister for Finance and Administration in 2002 and separate from the department’s budget appropriations. Revenue is derived from commercially based rents paid by agencies that occupy Government-owned property overseas. Our management of the overseas owned estate achieved a rate of return commensurate with risk factors in the overseas environment and the nature of the property. We also achieved a management expense ratio consistent with external industry benchmarks and paid an agreed dividend to the Government.

    Return on investment

    The rate of return on investment on the overseas owned estate was 8.66 per cent in 2008–09.

    Management expense ratio

    The management expense ratio indicates the relationship between costs of management and value of the estate. For 2008–09 the ratio was assessed at 1.353 per cent.

    Annual dividend

    The department paid to the Government a dividend of $24.731 million from the operations of the overseas owned estate in 2008–09, as agreed between the Minister for Foreign Affairs and the Minister for Finance and Deregulation.

    Property divestment

    The department returned $7.998 million from property divestment proceeds.


    We will continue to manage a significant construction program in the overseas property estate in 2009–10. We will maintain our program of regular post inspections and assessments to ensure that the value of the estate is maintained and enhanced in compliance with appropriate standards. We will be mindful of our objectives in management of the owned estate through prudent operation of the overseas property Special Account.


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