Palm Hills Sees `Aggressive Expansion’ as Egyptians Exit Cairoby
Homebuilder set to sign land deals east and west of capital
Developer to spend 2 billion pounds a year on construction
Palm Hills Developments SAE is planning “aggressive” expansion as more Egyptians move outside congested Cairo and invest savings in real estate rather than the declining stock exchange or foreign currency.
The luxury real estate developer will sign a contract this year for a mixed-use project on 2.1 million square meters (22.6 million square feet) of land east of Cairo on a revenue-sharing basis with the government, Chairman Yasseen Mansour said in an interview Thursday. He expects to sign another contract for 42 million square meters west of Cairo in the first half next year, he said.
“For the first time in history, you see immigration from a city as big as Cairo,” Mansour said in in interview at the company’s headquarters in Cairo. “They’re heading east and west in huge numbers.”
People consider real estate a safe investment amid concerns that they “will lose money on the stock exchange,” he said. “They are losing from day one in banks and, if they deposit in dollars, they won’t get them back.”
Palm Hills posted losses in the two years following the 2011 uprising that led to the ouster of former President Hosni Mubarak amid disputes over land contracts signed under his regime. The company completed a 1.65 billion Egyptian-pound ($211 million) capital increase last June and secured a 750 million-pound development loan. The company reported net income of 353 million pounds for 2014.
The company is seeking new land on the north coast of the country and expects to spend 2 billion pounds a year through 2017 on construction, Mansour said. It targets record reservations of more than 5 billion pounds this year and expects to deliver 1,500 homes, up from 981 last year.
Palm Hills shares have dropped 40 percent this year in Cairo trading, compared with a 16 percent decline in the benchmark EGX 30 index.