Egyptian real estate firm Palm Hills Developments said on Sunday demand for homes in Egypt helped fuel the firm’s highest ever reservations of new units in the second quarter, despite a dip in its bottom line.
Palm Hills said a new financing and advertising campaign also helped it sell LE 1.75 billion of new reservations, more than double last year.
But the firm’s net profit dipped 12 percent to LE 84.3 million, hit by higher minority interest and tax provision estimates, it said. Five analysts polled by Reuters had given an average forecast of LE 103.1 million.
The company sells homes before they are built and does not recognize some revenue on units such as apartments and multi-tenant buildings until they are finished, meaning sales can show up on their balance sheet years after they are made.
Egypt’s real estate sector, while not immune to the financial crisis, has fared relatively well compared with other regional economies, thanks largely to strong local demand and insulation from international credit markets.
But the country’s lack of a developed mortgage sector has made it harder for many Egyptians to afford the luxury homes sold in its mushrooming suburban developments.
Palm Hills said it had 47.8 million square meters of land at the end of the second quarter, with plots on Egypt’s Mediterranean and Red Sea coasts, and in Cairo and Saudi Arabia.
It said it would continue to try to sell more homes to middle-income Egyptian expatriates working in Gulf Cooperation Council (GCC) countries through its partnership with Burooj Properties, an arm of Abu Dhabi Islamic Bank.
Palm Hills said LE 196.4 million worth of contracts were cancelled in the quarter, 47.5 percent less than the same quarter a year earlier, when the global economic slowdown chilled Egypt’s real estate market.
