A leading Australian business analyst and forecaster has urged universities to sell off all their property holdings, with an estimated worth of up to Aus$10 billion (Pounds 5 billion), and use the money for research and expansion.

According to Phillip Ruthven, head of IBIS Business Information, the sale would be an easy solution to the financial challenges now facing higher education institutions.

Any university holding on to property will be trapped in the industrial age, Mr Ruthven says. He says that universities cannot afford to have hard assets on their balance sheet.

Mr Ruthven told a conference at Melbourne University that the "infotronics" age has followed the industrial age and is characterised by "outsourcing of services" to new industries such as tourism, recreation and business services, rather than the outsourcing of goods typical of the industrial age.

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Hard assets should be regarded as "lead in the saddlebag", he said. Leasing of hard assets such as land, buildings, equipment and stock, would free capital to facilitate faster expansion and for assets such as intellectual property.

But universities are unlikely to accept the challenge, although Melbourne University has been told by the state auditor general that it should sell some of its private property.

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Melbourne has acquired more than Aus$1 billion worth of property around the inner city, giving it one of the largest portfolios of any Australian university. But Victoria's auditor general says the university could manage its assets better to provide money for research and building maintenance.

In a report to the state parliament, the auditor general said the university should sell marketable properties worth nearly Aus$40 million and rethink expanding its portfolio. The report noted that Melbourne owned and managed more than 450 buildings on its main campus and at other locations.

Large amounts of capital were tied up and unavailable for academic or research purposes, the report said. Two years ago, the maintenance backlog had been estimated to be Aus$33 million.

But deputy vice chancellor Barry Sheehan said the auditors did not acknowledge that the university had a strategy plan for all its buildings and the purchase of new properties. Professor Sheehan made it clear the university would not be selling off any of its property in the immediate future.

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The University of Western Australia, however, has decided to rationalise its commercial property portfolio, now worth almost Aus$160 million. To improve returns, the university has put its biggest asset, a large metropolitan shopping centre, on the market.

The portfolio lists 17 properties in the Perth metropolitan area. It is believed the university has decided to sell off smaller properties to buy larger, better-quality ones or invest in property trusts.

Australia's biggest university, Monash, values its land and buildings at more than Aus$460 million but these are mainly concentrated on campuses. A spokesman said there were no plans to sell its Aus$13.3 million commercial holding in the Melbourne central business district and it would not consider taking any action until details of the federal budget were known next month.

A spokesman for the University of Queensland, which values its own property holdings at Aus$443 million, said most were campus buildings and it was highly unlikely they could be sold off.

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Sydney University values its property, plant and equipment at Aus$1.04 billion. Its investments, including property, are worth another Aus$489 million but there are no plans to sell any holdings.