CAIRO: Egypt is considering an amendment to the public auctions law that would solve the legal dispute over Talaat Mostafa Group’s Madinaty project and similar lawsuits that have hit property developers over the past months.
Cairo-based investment bank Beltone Financial said in a note, “The announcement is good news for the Egyptian real estate sector, particularly for TMG, as investors are looking for long-term solutions about land allocation laws in Egypt.
“As promised, if the government introduces new land allocation law soon, it will be a major boost for the sector.”
Investors have been wary as a number of Egypt’s real estate developers faced lawsuits over the validity of their direct purchase of state land from the government as opposed to putting the land up for a public auction.
“Investors are more concerned about the stability of the economic environment and they have had concerns that deals with the government could be disputed. This draft law would help create the right institutional setting and increase transparency, [so] investors will feel that uncertainty is less prevalent and will eventually have more trust in the investment environment,” Magda Kandil, director of the Egyptian Center for Economic Studies, told Daily News Egypt.
Magdy Rady, Egypt’s Cabinet spokesperson, said the government is ready to introduce a draft of the amendment to the law on the auction of public land, which will top the agenda for discussion and approval by the new parliament, reported the state-run Al-Akhbar newspaper.
A court upheld a ruling last month that invalidates the sale of state land to Talaat Mostafa Group for the $3 billion Madinaty project, and said that the government must put the land up for public auction.
The case has caused public scrutiny and mistrust as the vagueness of the law under which the land was sold led to confusion and varying interpretations resulting in the Madinaty dispute. Experts have said the legal battle has affected investor confidence in the real estate sector.
Rady told Al-Akhbar that the rationale for the amendment to Article 89 of 1998 is due to conflicting views and opinions about the interpretation of the law and its application. The amended law would address the jurisdiction over state-owned land and proper conduct in selling, renting or “right of use” of the land.
He added that it would also legitimize land allocations previously not included in the law regarding the allocation and disposition of state-owned property by direct order from the Prime Minister.
"Public institutions and persons could be exempted (from the law requiring auctions) if they have a set of rules and regulations that govern their own affairs," Reuters cited a Cabinet statement as saying, adding that the prime minister’s office already had the right to allocate state land directly to a chosen buyer.
Kandil said, “This is part of the government’s efforts to reform the enforcement of the rule of law, since research and media coverage has recently highlighted the fact that deals like the Madinaty case might involve corruption with contracts being signed benefiting the few rather than furthering public interest.”
She added, “The Egyptian public has been asking why there is no law to enforce and regulate these deals. It’s a welcome step in the right direction and hopefully more laws will come to increase transparency and legitimacy of these deals.”
