CAIRO: Egyptian real estate company SODIC is not exposed to legal challenges to state land sales but wants a long-term solution to the disputes because they are slowing investment in the sector, an executive said.
Talaat Moustafa, the country’s biggest listed developer, has been mired in a legal row over a purchase of land for its flagship Madinaty project since a court said in June the deal was illegal and ordered it be scrapped.
While SODIC has seen little impact on its own sales from the TMG dispute, investors are unnerved and fear there could be copycat cases, chief business development officer Ahmed Demerdash Badrawi told Reuters in an interview.
A government solution for the Madinaty case — scrapping the original land sale and reallocating the land to TMG — has calmed investors for now, he said.
"I imagine that there have been a lot of people who have waited on the sidelines to see if this is resolved satisfactorily," he said. "We are yet to see what the long-term solution will be."
SODIC itself will be more cautious about future expansion until a long-term fix to prevent legal claims against property was in place, Badrawi said.
"Going forward, on any new plots, I think that due diligence is going to be that much stricter to make sure there are no potential claims," he said, adding SODIC’s land bank was completely free and clear of any risk.
The company, which mostly sells high-end residential and commercial property near Cairo, has less exposure than others since it made most of its land purchases before a 1998 law under which the claim against TMG’s contract was made.
Badrawi also said SODIC has delivered, ahead of schedule, the first batch of 400 units in its flagship Allegria project, a 2.4 million square-meter development on Cairo’s outskirts.
Last week, it secured a LE 350 million ($61 million) loan to speed work on Allegria, and it is seeking to raise a total LE 1.5 billion by 2012.
SODIC has bid for a 410 feddan (426 acres) plot of land near Allegria but has not received official notification, Badrawi said. "Our understanding is that there is a possibility it will be re-tendered because we were the only bidders. If that happens, we will re-enter."
