CAIRO: Talaat Moustafa Group, Egypt s biggest developer by market value, plans to launch its first project in Saudi Arabia within three months to target the country s young, wealthy buyers, it finance director said.
The company wants 40 percent of its real estate sales to come from Saudi Arabia by 2014, and is shifting into the hotel business to diversify away from Egyptian home sales, Jihad Sawaftah told Reuters in an interview on Monday.
We are focusing on Saudi Arabia, he said. The land is there, the demand is there. And, don t forget, that is where the money is.
Sawaftah said he expected authorities to clear the developer s first project outside Egypt, a 4 million square meter commercial and residential town near Riyadh, by end-March.
Despite setbacks, not least the financial crisis and the sentencing to death of its former chairman for murder, Talaat Moustafa has benefited from its access to Egypt s middle-class homebuyers and its land holdings near Cairo, analysts say.
Egyptian homes comprise the bulk of the firm s LE 25 billion ($4.6 billion) backlog of unfinished projects, and most of the 7,000-10,000 homes it will complete this year will be in its flagship Medinaty project, Sawaftah said.
Deliveries in Medinaty, a large mixed-use development near Cairo, will start in April, he said.
Talaat Moustafa is also trying to more than triple the proportion of its revenue coming from hotels, rentals, and other sources of regular income to shield it from potential volatility in home sales, Sawaftah said.
We have a strategy to end up with recurring income making up around 35 percent of our income, he said. So far we are focusing on the hotel business.
To this end, the developer this year will finish a Kempinski hotel in Cairo – delayed last year because of the financial crisis – and at least four more in coming years.
To fund such projects, the company plans to raise $500-$1,000 million over the next five years by selling stakes in projects through private equity offerings, Sawaftah said.
The offers will not be public and will target specific investors that can bring management expertise as well as cash to the project, said.