With regard to the reports of the last few days concerning the procedures followed for the acquisition of buildings by the Republic, the Government wishes to clarify the following:
The Council of Ministers, recognizing the urgent need for housing for government departments, decided to explore the possibility of utilizing available office complexes on the market. To this end, a Call for Expression of Interest was published in the Official Gazette on 13 September 2019 with the aim of acquiring buildings to meet the housing needs of government ministries and departments.
A total of 16 properties were submitted under the Call for Proposals, which were evaluated by the Department of Public Works, which prepared a recommendation for the allocation of suitable buildings, according to the recorded needs and prioritizing the most immediate needs.
Among the selected buildings were the buildings named Metropolitan and Nicosia City Centre, which, according to a decision of the Council of Ministers, dated 30.12.2009, were selected for the construction of a new building in Nicosia. 10.3.2021, if the acquisition process is successfully finalised, the Administration of the Ministry of Labour and Social Security and the Social Security Services will be relocated to the Metropolitan building. Similarly, the Administration of the Ministry of Research, Innovation and Digital Policy, the Department of the Registrar of Companies and Official Receiver, as well as the Nicosia Outpatient Clinics and the Dental Services of the Ministry of Health are scheduled to relocate to the Nicosia City Centre building. The Department of Cadastre and Land Surveying, as the competent department, carried out the valuations of the two buildings based on internationally recognised valuation methods in three different ways. It is noted that the valuations are carried out by at least three different valuers within the Land Registry and Surveying Department, thus ensuring the impartiality, transparency and objectivity of the valuations. In order to complete the valuations, information was obtained from the Department of Public Works and from the Nicosia Municipality as the competent planning authority, while the valuers carried out a thorough market research of sales and rentals of modern offices in the area, taking into account the quality of the building's construction.
Specifically for the Metropolitan building, the market value of the building was estimated at EUR 20,350,000 and agreed at the stage of negotiation of the financial aspect at EUR 21,315,000, i.e. 4.7% higher than the initial valuation. The owner's representative private valuer estimated the value of the property at EUR 26,220,00, which was rejected by the Land Registry and Surveying Department as being too high.
It is noted that the Purchase Agreement has undergone a legal and technical audit and all safeguards have been put in place to ensure the interests of the Republic and the legality of this transaction, while it is stressed that the Purchase Agreement has not been signed pending the release of the funds.
It is emphasised that it is government policy, which was also followed in the present procedure, to examine the available alternatives for meeting housing needs in relation to the required cost, opportunity cost and implementation time, with a view to making a final decision on the procedure chosen as the most appropriate in the interests of the Republic. Bearing in mind that the time horizon for the construction of privately owned buildings under the tendering procedure, based on the experience of the departments concerned, could not be less than 5 years - without taking into account the potential for delays in the event of appeals and other legal proceedings that may arise from the tendering procedure - the opportunity cost of any delay in the construction of a privately owned building (additional man-hours, rent, etc.) would be very high.etc.), as well as the information provided by the Department of Public Works on an expected increase in construction costs of around 18.3% from the year 2022, it was assessed that at this point in time the acquisition of existing buildings available on the market is the most advantageous option for the interests of the Republic.
In view of the above, the positions and assertions of the Auditor General of the Republic in this matter are assessed as unfounded and all relevant documents, information and summary copies of the assessment reports will be submitted to the relevant Parliamentary Committee of the House of Assembly and any questions raised will be answered in the following sessions.
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