Cyprus Mail
Cyprus

Mall relaxation opens up Pandora’s Box

By Elias Hazou

THE row over the recently unveiled building incentives continued unabated on Thursday, with the opposition accusing the government of pandering to big business interests, and the administration countering that its goal is to encourage investment and create jobs.

Main opposition party AKEL said that in practice the relaxations benefit big businessmen alone. They accused the government of arbitrarily deciding on the relaxations, without any public consultation whatsoever.

Chiming in, socialist EDEK asserted that the measures serve the interests of an ‘oligarchy’, while at the same time property taxes are choking the life out of small-to-medium sized businesses.

The government also fended off criticism from the Scientific and Technical Chamber (ETEK).

Interior minister Socrates Hasikos slammed ETEK for spreading rumours that the government is ‘gifting’ the Shacolas Group some €20m as a result of building relaxations for the Mall of Cyprus, just outside Nicosia.

“These reports are totally inaccurate and baseless. The source of this misinformation is, unfortunately, ETEK itself, and the media are rehashing this view.”

Reports said that the higher building coefficient recently granted by the government, along with a blanket amnesty for illegal building until 2020, would specifically benefit the Mall of Cyprus to the tune of €20m, but that an accommodation was reached with the government for the company to pay back only €1.5 as an offset.

Usually, commercial projects benefiting from relaxations compensate the local municipality by co-financing public-works projects.

Hasikos spoke of “outrageous numbers” being bandied about, and said the goal was obviously to portray the government as doing favours to big business.

Waving off ETEK’s claims, Hasikos noted there was no way the value of the additional building space at the mall – some 5,000 square meters – was worth €20m.

By ETEK’s logic, he said, that would work out to €4,000 per square meter, a rate which only finished luxury apartment blocks fetch on the market.

“What the business [the company behind the Mall of Cyprus] will ultimately pay as an offset has yet to be determined,” said Hasikos, adding that this would be decided by a special panel.

“The bottom line is this: there is a cabinet decision for an offset to be paid, which will go to Nicosia municipality.”

Meanwhile, in a statement, ETEK said the extra space granted to the mall was actually far greater than the 5,000 sq.m. cited by Hasikos.

“Whether a [town planning] derogation of 7,790 sq.m. on an existing development with high traffic lends added value, and whether this higher value was taken into account in the due diligence studies prior to fixing the development’s sale price, needs no further comment,” ETEK said.

The chamber was responding to a statement put out by the Shacolas Group, which said the expansion of its Mall was done according to the law.

Last month, the Shacolas Group revealed it had struck a deal with the South Africa-based Atterbury Group to sell The Mall of Cyprus and the Mall of Engomi for €193m.

ETEK is hinting that the conglomerate knew beforehand that it would be granted a derogation, which it used for a higher asking price for the mall.

ITTL, part of the Shacolas Group and the company behind the Mall, had previously filed for an expansion permit with the Derogations Council.

By a majority vote, the Derogations Council denied the request, on the grounds that the proposed expansion deviated substantially from the Nicosia master plan. But in late May, its decision was overruled by the cabinet, which instructed the council to re-examine the case.

According to reports at the time, the dissenting minority within the Derogations Council argued that the development should be granted an additional 3,800 sq.m., which represented the ‘untapped’ building coefficient at the mall.

They also argued that the company should pay for anything over 3,800 sq.m. It’s understood that ITTL were in fact asking for extra space of some 7,500 sq.m., but eventually settled for 5,000sq.m.

At the time, Hasikos was quoted as saying that the company should pay up for any additional building coefficient, suggesting by way of example €1.5m, the same figure now cited by ETEK.


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