State land is not underestimated, nor is the land registry engaged in some scam to swap state properties for lower-valued private properties for the benefit of certain connected individuals, the director of the Department of Lands and Surveys (DLS) has said.
DLS head Andreas Socratous told the Sunday Mail the ongoing political hoo-ha over allegedly low estimates of state-owned land can be attributed to politicians, as well as the auditor-general, not comprehending how the department carries out its calculations.
The issue surfaced last week when auditor-general Odysseas Michaelides and MPs piled on land registry officials for lowballing the value of state land, including one piece of prime real estate in central Nicosia which from €70m in 2014 was recently re-priced at just over €5m.
Earlier this summer MPs noticed on the DLS website that the plot was revalued at €5.3m.
In 2010 the land registry had valued the same plot at €143m, in 2013 at €92.5m, and in 2014 at €70m.
Opposition MPs smelled a rat, suspecting the government intended to sell the so-called ‘Qatar plot’ at a cut-rate to one of its own.
The auditor-general cited a few other examples, in particular one in the village of Vasa Kellakiou, Limassol, where a state plot had been valued at €1.76m in 2013. It was slated to be exchanged for a piece of private property.
In 2015 the DLS carried out another valuation, finding the state land was worth €460,000 – a drop of about 75 per cent.
“Our position is that the DLS’ valuations are not credible. From the samples we examined, it appears that their valuations are done on a ‘come what may’ basis,” Michaelides remarked at the time.
Socratous conceded the DLS may have made an isolated error on the ‘Qatar plot’ in Nicosia (located opposite the Landmark Hotel, formerly the Hilton), and promised to come back with a corrected value.
“Mistakes are part of the game. I have no problem stating that we made an error. But to extrapolate this one case into a supposed conspiracy of us deliberately deflating the value of state land, is overblown,” Socratous tells the Sunday Mail.
The official explained that the DLS carries out two types of valuations. The first is called a ‘general valuation’ and by law takes place every three years.
The primary purpose of a general valuation is to calculate property taxes and fees – municipal waste fees, land transfer fees and so on.
General valuations are based on the physical and legal characteristics of the immovable property, such as: the type of property, the area, the planning zone, the location, the kind of access, relation to the road and the shape.
This type of valuation employs a comparative method – it utilises data from a specific area and extrapolates an average value for that area.
The DLS also carries out a ‘special valuation’. This is a snapshot of a particular property at any given time, and its objective is to estimate the value of a property when it’s going up for sale. Thus, the valuation is as close to the market value as possible.
General valuations of state property are carried out by the DLS itself. For special valuations of state property, the DLS hires registered valuers from the private sector.
“So we’re talking about two vastly different methods and processes,” Socratous notes.
In parliament, the auditor-general sought to brush off this explanation as evasive tactics by the DLS. The law, said the audit boss, now obliges the DLS to estimate state property as close as possible to the market value as possible, even when it comes to general valuations.
But coming back, the DLS director said this comment showed a lack of understanding of the distinction between general and special valuations.
It does not change the fact that the data used are different, he said.
On the notorious state plot opposite the Landmark Hotel – which years ago was set to be sold to Qatari interests, but the deal fell through – Socratous clarified that the €5m price quoted was based on a prior general valuation.
“In short, if the plot were to come up for sale at any time, we’d undertake a special estimate for it, and have private valuers go to the site and come up with a number.
“In other words, our esteemed politicians can rest assured that the plot will not be sold on the down-low and on the cheap. There is no sleight of hand here.”
He added: “I think our MPs will find that they may have jumped the gun when we revisit the matter in parliament.”
In 2018 the DLS began the mammoth task of updating property values – private as well as state-owned – to better reflect their market values.
The revised 2018 valuations were to be based on a property’s market price. In 1980 and 2013 properties were assigned a general price, which did not represent the real value of the property.
A main objective of the undertaking was to use the new property values to levy municipal and community fees on immovable property.