Certainly, and I will try to pick up a number of the issues that have arisen. First, Shannon Development found the report very beneficial and of very practical use. It came about at a time when we were carrying out an overall review of our property management functions, so the report of the Comptroller and Auditor General has complemented some other external consultancy reports we had in at the time. Many of the recommendations within the value-for-money report have already been put in place in the company or are in the process of being put in place.
To give practical examples, a couple of the major points came up. First was the need to improve our management information systems. Mr. Long has already advised the committee as to where we are on that. We are undergoing a major revamping exercise on that.
Another part of the report related to the current value of the agency's property to current market value. We took that on board and, since then, we have employed one of the national property companies to carry out a direct consultancy for us and examine the current market value of a range of our benchmark properties. It is interesting to note that, contrary to the expected view that such a valuation might lead to the suggestion that we should devalue properties carried on our books, the outcome was the opposite. At the lowest level, property values on our books are being maintained but in many cases the current market value is coming out a little higher.
Since the report, which is a little historic now, there have been a number of changes, one of which is the involvement of the private sector. Suffice to say that in our area the involvement of the private sector with us in directly providing the sort of facility we need for enterprise has increased to the level where, over the next 12 to 18 months, we expect and have agreements in place with the private sector to invest approximately £30 million in industrial buildings in our area. That gives an indication of some of the things that have gone on.
There has been much talk about the strategic nature of the agencies' holdings, and I can give the committee a practical example of that. First, our business is economic development in our region and while property may not be our core function - overall economic development is our core function - property management and the development of same is an integral part of our whole approach. To put it simply, we use property on two levels, first, to encourage and facilitate the establishment and development of specific enterprises - there has been much talk about that - and, second, to establish major new regional infrastructure. I will give a practical example of that.
A little more than ten years ago, Shannon Development was involved in establishing what was to become the National Technological Park in Limerick. We did that at a time when, to take a point that arose earlier, there was zero interest on the part of the private sector in making investment in that area. To bring it up to date, that park is now home to over 80 enterprises and directly employs more than 4,500 people but by any standards the park is recognised as a focal point for investment in our region of the west.
We are currently applying that sort of property-led approach and integrating it with all our development programmes to establish a number of other centres in the region. In partnership with a number of others we are currently developing a new technology park in Tralee. Not only is it physically next door to the institute of technology there but, along with the institute, we are developing an integrated education and industrial location. The same is being done throughout the region.
I want to deal with another point raised by Deputy Dennehy. One of the other areas in which we are leading a similar initiative is the town of Ennis. To answer the query about possible overlap, in terms of the industrial agencies, that cannot happen in our region because there is a geographical boundary. IDA Ireland does not, as a matter of policy, hold land in our area. Traditionally it would have done that but a number of years ago the land which forms part of what we currently hold there was transferred to us by IDA Ireland on the basis that we could better monitor and manage the whole thing.
The point I want to make about Ennis is that I believe we have managed to co-operate very effectively with the other State authorities. A good example of that is that the Mid-Western Health Board no longer had a need for what had been a major site and a hospital in Ennis. At the same time, we needed a location which we could develop and dedicate to knowledge-based industry. We not only talked to the health board, and eventually purchased that from the health board, we also liaised with the local authority. Having bought the overall site, building and land area, we have sold the building on to the local authority because it was in need of a new county council headquarters. That is a good example of all the State operations coming together.
Deputy Durkan queried targets for rollover property, particularly land. I can give a specific answer to that. Our objective would be to roll over our property assets approximately every ten years. Our capital investment programme is running at approximately £13 million per annum against an overall property holding of just over £100 million. We are talking about a ten year turnover.
While our primary focus is enterprise development and economic development, we are mindful of the need to do that in a financially effective way. Indeed, that is evidenced in the returns we were achieving at that time which, in the original report of the Comptroller and Auditor General, showed an ROI of approximately 4.7 per cent. I am happy to say that since then that number has changed. The next year it increased to 5.4 per cent and the figure for 1998 would be about 6.2 per cent, at a time when interest rates were falling. We now have an Exchequer borrowing rate of approximately 3.5 per cent so that ROI represents nearly two times the current borrowing rate.
To take that a little further, while we would accept ROI is a good indication of value for money, an internal rate of return figure probably better explains what is going on in that it takes into account not just the ongoing revenue stream but also what is happening to the underlying capital value. We have set specific targets for ourselves. In examining every capital investment project we are looking, in terms of specific projects, for a 10 per cent internal rate of return. We would hope that, taken together with all the other assets we already hold, that would lead to an overall average ROI figure of about 7 per cent. We are very conscious that we want to use the property to achieve economic development but we are mindful of the need to keep an eye on the financial side also.
