Sept. 26 (Bloomberg) -- Egypt said Talaat Moustafa Group Holding will be allowed to keep land for its Madinaty housing project, bypassing a court ruling that annulled the company’s purchase of the property from the state.
The government will revoke its existing sales contract with Talaat Moustafa, Egypt’s biggest publicly traded real estate developer, Cabinet spokesman Magdy Rady said in Cairo. It will then reallocate the land to the same company under a new contract, invoking a law that allows the authorities to assign land by direct order to protect public interest, he said.
Madinaty is Talaat Moustafa’s biggest development, designed to accommodate 600,000 people in 120,000 housing units. The government sold the land in 2005 in exchange for 7 percent of the project’s built-up area. The value of the government’s share will be “at least” 9.97 billion Egyptian pounds ($1.74 billion) under the new contract, Rady told reporters.
“This sets the floor for the amount Talaat Moustafa has to pay for the land,” said Jan Pawel Hasman, real estate analyst for Cairo-based investment bank EFG-Hermes Holding SAE. “This should be good news for investors as we estimate the current market value of the in-kind payments to be given to the government at “between 14 billion and 15 billion pounds, he said by telephone.
A court ruling to annul the sale because of irregularities, upheld on Sept. 14, prompted foreign investors to sell Egyptian real estate stocks because of concern that developers will be forced to pay more for land they already own.
Shares of Talaat Moustafa were little changed at 7.12 Egyptian pounds at the 2:30 p.m. close in Cairo. The cabinet announcement came after the close of the market.
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