Public buildings and land in Wales face a backlog of about £2bn worth of repairs, the auditor general has said.
Many public bodies in Wales are breaching statutory health and safety laws due to the poor condition of property, the report said.
It also said most organisations' buildings and land were not delivering the best possible value for money.
The assembly government said it was committed to managing public expenditure as efficiently as possible.
The report said the assembly government needed to liaise with public bodies on a more co-ordinated approach.
The review found that many organisations did not have accurate information on building maintenance.
"It is difficult to assess the total value of backlog maintenance, particularly for local government," it said.
But the auditor general estimated that the total backlog maintenance across Wales was £2bn, with £1.3bn of that in local government, £0.5bn in the NHS and £0.2bn in other sectors.
The Welsh public sector spends more than £500m each year running land and buildings worth some £12bn, the review found.
Auditor General for Wales, Gillian Body, said: "Managing the competing strategic and operational demands of land and buildings can be difficult but effective land and buildings management can support better service delivery, improve public and staff safety, reduce operating costs and minimise their environmental impact."
The review said that most organisations had developed land and buildings strategies, but many of these were out of date, insufficiently flexible or inadequately resourced.
Jonathan Morgan AM, chair of the assembly's public accounts committee, said: "At a time when public bodies are facing severe cuts in their budgets, this work emphasises the need for public bodies to make better use of their land and buildings to support service delivery and to ensure that they take full advantage of opportunities to reduce operating costs."
A Welsh Assembly Government spokesperson said: "We are committed to managing public expenditure as efficiently as possible and to working with our partners to make efficiency savings and deliver high quality services.
"This is why we have set up the Efficiency and Innovation Board, chaired by Business and Budget Minister Jane Hutt.
"The public estate in Wales is valued at just under £10bn, but is split across a wide variety of sectors and organisations.
"The Efficiency and Innovation Board has agreed to develop and deliver land transfer protocols for use by the public sector to reduce cost and time associated with the use and disposals of the public estate."