CAIRO: Developer Talaat Mostafa Group’s land contract for its Madinaty project is valid, an Egyptian court ruled on Tuesday, signaling an end to a long-running legal battle over the $3 billion scheme.
The development of shops, homes, hotels and a golf course has been caught up in a dispute since last year over the purchase of land directly from the state instead of by public auction.
The court’s decision, confirmed by both TMG and the plaintiff, engineer Hamdy Fakharany, has to be implemented and cannot be appealed. However Fakharany said he would challenge the ruling in the higher administrative court.
TMG shares climbed 7.6 percent on Tuesday after the ruling.
"We believe that TMG’s legal saga has effectively ended," Jan Hansman, an analyst at EFG-Hermes said.
"This is very positive news for the company and, in our view, it is likely to remove the overhang on TMG’s shares in the short term," Hansman added.
The legal challenge to TMG’s flagship development last year sparked a sector crisis as several copycat lawsuits were launched. The property market downturn worsened with the ousting of Egyptian president Hosni Mubarak in February.
Tuesday’s ruling stipulated that a committee should revalue parts of the land that TMG has not utilized since it bought the site.
However, TMG’s lawyer Shawky El-Sayed said the committee was unlikely to revalue any part of the land because there was construction work in the whole area that was purchased.
"This means if parts are still mountains and desert like it was when the company purchased the land in 2005. Of course there is no part of the land that is still like this now," he said.
"The decision can be challenged not appealed by either side but today’s ruling has to be implemented," El-Sayed, said.
Fakharany told Reuters: "The ruling is not enough. The whole contract is invalid, why do you want to value part of the land and not the other."