Foreign investors are selling shares of Egyptian real-estate companies on concern that court cases may force developers to pay more for past land purchases, according to two analysts.
A court on Sept. 14 upheld a ruling canceling the sale of 33 million square meters (355 million square feet) of government land on Cairo’s outskirts to Talaat Moustafa Group Holding, the country’s biggest publicly traded developer. A case was filed against Palm Hills Developments SAE, the second-biggest developer, by Hamdy Fakhrany, a private Egyptian citizen, seeking the annulment of its land purchase in New Cairo. Both cases were linked to irregularities in selling government land.
“We’re seeing a sell-off by foreign and institutional investors,” said Osama Mahmoud, team head of the foreign sales desk at Cairo-based Prime Holding. “Some people are panicking, but most are selling part of their holdings and waiting to see what’s going to happen.”
Foreign investors, who were the net buyers of 126.7 million shares on the Egypt’s benchmark EGX30 Index until Sept. 14, became net sellers of 54.3 million shares in the three days after the ruling against Talaat Moustafa, according to data compiled by Cairo-based EFG-Hermes Holding SAE. Talaat Moustafa and Palm Hills accounted for more than a quarter of trading volume during the period, according to Bloomberg calculations.
Shares of Talaat Moustafa, based in Cairo, lost 16 percent in the three sessions following the court ruling, the most over a similar stretch since October 2008. Palm Hills declined 4.8 percent. The EFG-Hermes Real Estate Index, which measures the eight biggest and most traded stocks, fell 8.7 percent in the same period.
“We’re gradually exiting Egypt,” said Dubai-based Tariq Qaqish, who helps manage around $100 million at Al Mal Capital PSC. “There are a lot of stories that we need transparency on. Those issues are reflected in high volatility in the market.”
Prime Minister Ahmed Nazif said the government will form an independent legal committee to find a solution for its land sale to Talaat Moustafa. Egypt’s government may introduce legislative amendments in order to uphold the land sale to Talaat Moustafa and protect the interests of investors in the Madinaty project, Al Alam Al Youm newspaper reported yesterday citing Minister of Housing Ahmed El Maghraby.
Talaat Moustafa shares gained 4.8 percent to 6.53 pounds in Cairo yesterday after the minister’s comments, valuing the company at 13.3 billion pounds ($2.33 billion). Palm Hills rose 2.9 percent to 5.31 pounds, giving it a market value of 5.6 billion pounds.
Sep202010
Expat Real Estate Investors Exit on Concerns Over Court Rulings Impact
Foreign investors are selling shares of Egyptian real-estate companies on concern that court cases may force developers to pay more for past land purchases, according to two analysts.
A court on Sept. 14 upheld a ruling canceling the sale of 33 million square meters (355 million square feet) of government land on Cairo’s outskirts to Talaat Moustafa Group Holding, the country’s biggest publicly traded developer. A case was filed against Palm Hills Developments SAE, the second-biggest developer, by Hamdy Fakhrany, a private Egyptian citizen, seeking the annulment of its land purchase in New Cairo. Both cases were linked to irregularities in selling government land.
“We’re seeing a sell-off by foreign and institutional investors,” said Osama Mahmoud, team head of the foreign sales desk at Cairo-based Prime Holding. “Some people are panicking, but most are selling part of their holdings and waiting to see what’s going to happen.”
Foreign investors, who were the net buyers of 126.7 million shares on the Egypt’s benchmark EGX30 Index until Sept. 14, became net sellers of 54.3 million shares in the three days after the ruling against Talaat Moustafa, according to data compiled by Cairo-based EFG-Hermes Holding SAE. Talaat Moustafa and Palm Hills accounted for more than a quarter of trading volume during the period, according to Bloomberg calculations.
Shares of Talaat Moustafa, based in Cairo, lost 16 percent in the three sessions following the court ruling, the most over a similar stretch since October 2008. Palm Hills declined 4.8 percent. The EFG-Hermes Real Estate Index, which measures the eight biggest and most traded stocks, fell 8.7 percent in the same period.
“We’re gradually exiting Egypt,” said Dubai-based Tariq Qaqish, who helps manage around $100 million at Al Mal Capital PSC. “There are a lot of stories that we need transparency on. Those issues are reflected in high volatility in the market.”
Prime Minister Ahmed Nazif said the government will form an independent legal committee to find a solution for its land sale to Talaat Moustafa. Egypt’s government may introduce legislative amendments in order to uphold the land sale to Talaat Moustafa and protect the interests of investors in the Madinaty project, Al Alam Al Youm newspaper reported yesterday citing Minister of Housing Ahmed El Maghraby.
Talaat Moustafa shares gained 4.8 percent to 6.53 pounds in Cairo yesterday after the minister’s comments, valuing the company at 13.3 billion pounds ($2.33 billion). Palm Hills rose 2.9 percent to 5.31 pounds, giving it a market value of 5.6 billion pounds.