Real estate developers in Egypt who profited from their associations with the former president are now receiving their comeuppance, and the caretaker government is trying to settle disputes about land bought cheaply through the old regime.
Talaat Moustafa Group (TMGH) is one of the largest publicly traded builders by assets, and has already been defeated in court. It may be forced to forfeit state land bought cheaply. This ruling sparked a new round of additional court cases, and now the interim government faces the delicate task of trying to settle these disputes without scaring off foreign investors who make up 90% of the Egyptian real estate market.
When Mubarak was deposed in February many real estate companies lost much of their government protection from court cases, and two former housing ministers and a tourism minister have already been jailed over the misuse of public funds.
Analysts see these developments as creating uncertainty in the market for the short-term, but think that in the long term it will prove better for business due to increased transparency.
One solution being put forward is that developers should pay the difference between the price paid for land and the value deemed fair by the courts, which could be around 300 Egyptian pounds ($50) per square metre for land in Cairo. It may depend on the Egyptian public’s reactions, as part of the reason they took the streets in the first place was due to corruption allegations. Ultimately the government is keen to preserve and encourage investments while observing the law.
In the meantime developers are struggling to revive sales, including those who don’t hold any disputed land, with some expecting near zero sales for this year.