CAIRO – Egyptian judges recommended a court should cancel the settlement of a drawn-out legal dispute over Talaat Moustafa Group’s (TMG) flagship real estate project, threatening more turmoil for the struggling property sector.
TMG shares fell almost 10 percent on Sunday as investors dumped the stock, disappointed that the dispute over the company’s $3 billion Madinaty residential and leisure development had reared its head again.
Recommendations by panels of judges are not legally binding, but courts often respect them. State news agency MENA said on Sunday the Higher Administrative Court had adjourned a review of the case until November 7.
“The court isn’t going to look at this case until November, which means investors will be suffering for another four months,” said Osama Mourad, chief executive of Arab Finance Brokerage.
Madinaty, which includes homes, hotels and a golf course, is one of the most ambitious examples of a Mubarak-era drive to rehouse mostly rich and middle class Egyptians on the outskirts of the teeming, polluted capital Cairo.
The court battle, over the sale of state land near Cairo for the development, threw Egypt’s property sector, a vital source of jobs and investment for the wider economy, into a crisis in 2010 from which it is yet to recover.
The problems deepened when President Hosni Mubarak was overthrown in February last year.
TMG shares lost more than two thirds of their value in 2011, but have soared 60 percent this year on hopes that the company’s worst problems were over.
The dispute began when a court ruled the land for Madinaty should have been sold by auction to get the best price.
The case epitomised a crisis of confidence in Mubarak’s last government before it was toppled in a street revolt driven by popular anger at poverty and high-level corruption.
The ruling sparked concern that many other high-profile real estate projects could be scrapped because the land they were built on was sold illegally.
Last November, after more than a year of wrangling, an administrative court asserted the Madinaty deal was valid after all, but insisted that a committee revalue some of the land that had not been used since the company bought the site.
BACK TO SQUARE ONE?
But on Sunday, state media reported that the panel of judicial experts recommended the amended contract be declared void, and said the earlier court ruling that upheld the contract between TMG and Egypt’s New Urban Communities Authority (NUCA) be cancelled.
TMG said the panel’s recommendation was part of preparations for the court to hear the case and stressed that it was not binding. The company gave a different date for the new court hearing – November 4.
Mourad at Arab Finance said many investors had bought back into TMG assuming its legal woes were a thing of the past.
A new president was sworn in on June 30 after the first free leadership contest in the country’s history, cementing hopes among investors for a new start after more than a year of political and economic turmoil since Mubarak was overthrown.
“We are against these types of court decisions regardless of the outcome,” said Mourad. “You should not punish investors because of the actions of a corrupt government officer. This court is damaging the economy.”