Madinaty construction moving forward, say TMG execs

Theodore May
4 Min Read

CAIRO: Talaat Moustafa Group (TMG) executives held a press gathering Saturday at the site of their flagship development project, Madinaty, in the wake of a tumultuous week for one of the country’s leading real estate firms.

TMG’s stock saw a steep slide earlier this month after it announced a marked drop in profits. Already reeling from the earnings report, the firm’s stock took another hit when a Cairo court handed former CEO Hisham Talaat Moustafa the death penalty for conspiring to murder Lebanese pop singer Suzan Tamim in Dubai last year.

These setbacks came at a time when the firm has been aggressively promoting its building projects in an effort to sell lots for Madinaty, which is slated to be one of the most ambitious development projects ever undertaken in Egypt, and others around the country’s capital.

Reporters on Saturday were given a bus tour of the construction site and were then invited to a press conference led by Jihad El-Sawafta, TMG spokesman and executive vice president.

On May 13, the firm announced that it had sustained a 26 percent drop in profit in the first quarter of 2009 as compared to the same stretch of time a year earlier. Total profits for the period were LE 314 million.

On the day of the announcement, the price began to drop as investors showed their worry over the company’s worse than expected results. The stock, though, which last traded at around LE 4.50 is well above its low in March, when the share was trading below LE 2.

But with thousands of construction workers in action across Madinaty’s plot, the firm was clearly eager to put another foot forward.

“We invited you here to see for yourselves the progress we’ve made in the construction projects, El-Sawafta told Daily News Egypt.

El-Sawafta said that the goal at Madinaty is to manage three factors: sales capability, construction capability and financing.

He blamed a share of the recent profit slide on the efforts to find this balance. Sales, he said, were so out-pacing construction capability that the firm has intentionally slowed sales in order to sign only contracts that the firm would be able to honor.

“We are committed to delivering the specs on time. We have a stated policy in this regard, he said, noting that many of the houses should be delivered early.

The company’s ambitious plans for growth in a time of great economic uncertainty have somewhat destabilized the stock, but the murder trial has also contributed to the instability.

The share faltered on Thursday, losing more than 14 percent of its value on the day that the Moustafa verdict was issued.

Progress and construction at the Madinaty site offered stark contrast to the news coming from the stock exchange and the Moustafa trial courtroom.

Buildings were springing up right and left from this 33.6 million square meter project that’s expected to hold 600,000 residents in more than 100,000 units. The units will be a mix of villas and lower-price point apartment buildings.

Essentially creating a city in the desert, roughly 30 km to the east of Cairo, TMG has included plans to construct shopping centers, a water park, several golf courses, and a number of restaurants to make Madinaty something of a fully functioning city.

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