22 January 2017

By Yasmine Saleh

Cairo-based property developer Palm Hills is going ahead with the sale of its land plots in Saudi Arabia as it focuses on expansion in Egypt and Africa, senior company officials said.

Palm Hills had announced in 2008 that it plans to invest 3 billion Egyptian pounds ($157.9 million) with a partner to develop 5 million square metres of land it purchased in the Saudi capital Riyadh and the coastal city of Jeddah for commercial and residential projects.

However, the deal did not go through and the company decided to offer the land for sale in 2014, according to the officials.

“The plans are the same, we still are looking for a buyer,”Palm Hills co-CEO Tarek Abdel Rahman told Zawya in a telephone interview last Tuesday.

“We know that the Saudi market is not doing terribly well, the economy itself and the real estate in particular after the white land tax,” he said, referring to a tax introduced by the kingdom last year on undeveloped urban land held by individuals or non-government entities that would be equivalent to 2.5 percent of the value of the land. Read more here.

Instead Palm Hills will focus on building on its pipeline in Egypt, where it has performed well in the past two years, moving ahead with several residential and commercial projects.

It has also partnered with the government on two projects and its officials said this year will include completion of several new projects in Egypt and the launch of a new one in Africa. Read more here.

“We are looking at this stage at Africa, not the Gulf at this stage,” Palm Hills’ Chairman Yaseen Mansour told Zawya in the joint interview. He said the company planned to a launch a new mainly residential project in Africa next year but declined to provide further details.


“Huge opportunities” in Egypt 

Both Mansour and Abdel Rahman said they were very excited about the company’s performance in the Egyptian market over the next two years, especially in 2017, when many of their ongoing projects are due to get completed.

Palm Hills has signed deals with the government for two mixed-use projects in upscale market areas in the capital Cairo. One of the projects would create Egypt’s second largest real estate project, spanning over 25 million square meters -- equivalent in size to about a third of Dubai emirate in the United Arab Emirates.

“We have been exceeding our (sales) target year over year, we keep seeing growth year over year of not less than 30 percent,” Mansour said.

The company posted a 59 percent increase in its third quarter net profit last year, compared with declines of 80 percent and 40 percent in the second and first quarter respectively, which officials have said were because of a change in accounting standards calculations.

“We did extremely well in the third quarter and we did extremely well in the last quarter of the year. So, we expect profit to come out very positively in 2016,” Abdel Rahman said.

The company has not yet released its fourth quarter or full year results.

The two officials said there was a notable rise in purchases last year from Egyptians living in the United States, Canada, Europe and the Gulf Arab region who are seeking to benefit from the low value of the Egyptian pound against the U.S. dollar and invest in the real estate market in Egypt.

“What we sold to those people in 2016 was maybe five times what we sold (to them) in 2015,” Mansour said, adding that he expects higher sales to Egyptians living abroad in 2017.

He also praised Egypt’s decision to float its currency last November as part of a series of economic reforms undertaken by the government to revive the country’s ailing economy.

“It came very comforting to the business community in Egypt and to investors outside who are interested in Egypt. It came a little bit late but it is definitely a step in the right direction,” he said.

When asked about how he sees the current business situation in Egypt, Mansour said: “It is a challenge that comes with huge opportunities.”

(Additional reporting by Anoop Menon; Editing by Ghaida Ghantous)

© Zawya 2017