APRIL 2011 |
www.opp.org.uk
NEWS By Amit Katwala
LARGE Egyptian developers could face hefty sanctions under a new government, according to an industry expert in the area. Tarek el Saadi of Sharm-el-
Sheikh Real Estate told OPP that large companies, which were able to secure government land at a price below market value thanks to their contacts in the previous regime, are now being investigated. He said: “Some of the big developers
didn’t get land in the proper way, and got it for a cut price. They will be penalised and they will have to pay the difference. There is also due diligence being done, many don’t have the proper residential licensing for the development, as many developments have a hotel and residential licence but sell all the units, which is not correct. This contradicts the licence,” he says.
Egyptian developers | will have to clean up their act under the new government
However, el Saadi doesn’t think that this will be too much of a burden for the developers to cope with. He said: “His profit will drop a little, but he won’t lose the land. The market will be cleaned up, and it will boom as confidence comes back.” He also added that his firm, Sharm-el-Sheikh
Hotel ideas needed
THE Choice Hotels Group is about to embark on a major property development strategy across France, Germany and the UK, and is looking for developers and investors to come forward with ideas. Speaking exclusively to OPP at the International Hotel Investment Forum in Berlin last month, Choice’s vice president for international development, Olivier Dupont said “we are going to be very focused on growing our brands in Europe for the next few years. The three main countries we have picked have got enormous potential for our brands, which range from Comfort Inns and Quality Inns to Sleep Inns and Clarions in the four star market. We are actively looking for key partners who are prepared to invest and help us grow the portfolio.” The Choice group is a franchised operation and international property developers and investors should think about making a move now, the company’s global senior vice president David Pepper told OPP because, in developed economies like Germany, France and the UK, “the hotel development market is at an historic low point. The banks are
still not lending for new build projects and we can see a real opportunity, as the economic situation improves, for more money to come in and fi ll the gap … especially private equity.” According to Dupont, “we are convinced that we can get much more leverage out of brand portfolio in Europe in the immediate future. We are going to raise the bar and add to our overall perceived value in the market. There is a lot of support from the Choice brand for anyone looking for a new hotel opportunity with us. We will invest in HR, food and beverage outlets, IT, staff training, online SEO and SEM marketing, branding, systems delivery, and so on, to help our franchisees be as successful as possible.” Dupont can see a lot of potential for
the group’s upmarket Clarion brand in Germany for instance, and for the mass- market Comfort brand in the UK. “The US hotel market has reached saturation point, and it is hard to grow revenues and margins there right now. This is not the case in northern Europe.” There is a detailed report on the IHIF congress in this issue, on page 46.
Real Estate, only did business with companies that obtained land through the correct channels. He said: “As a company, we only work with small developers who tick all the boxes and get all the land properly.” Last month, the Palm Hills Development became the first to fall
DEVELOPER | 13 New regime to punish corrupt fi rms
foul of the cleaned up property climate in Egypt, when a judicial panel ruled that a state land sale to it was against the law and must be stopped. The panel said, “the contract signed
between the New Urban Communities Authority (NUCA) and Palm Hills violated the auctions law because it was signed by direct order.” Hamdy Fakhrany filed the Palm
Hills suit, contesting a 960,000 sqm plot of land in a Cairo suburb, saying it was sold by NUCA, a housing ministry body, at below the market value for the land. The decision was based on the
view that the land was allegedly sold in violation of the law and below market prices, according to the official statement. There is an in-depth look at Egypt’s
hotels and resorts to find out how they are coping with the aftermath of the revolution on page 50 of this issue.
$500m property fund
Hong Kong-based developer China Overseas Land & Investment Ltd, which is controlled by the government’s construction ministry, revealed last month that it is planning to set up a real-estate fund of $300 million to $500 million in case the Chinese state’s measures won’t dampen down current property demand. The fund, which will invest in residential and commercial schemes in China, should be ready to start operating before the end of the fi rst half of this year says Chairman Kong Qingping. In January, home prices rose in all but
two of the 70 cities monitored by the state. Land costs are rising steeply too. “Any company that has a nationwide coverage is certainly stronger than those in single cities,” Kong said this week as cities such as Jinan in the north, Nanjing in the east and Kunming in the south have all followed the capital Beijing in introducing local curbs on home purchases. The government this year raised down-payment requirements for second- home purchases and imposed taxes on residential properties in Shanghai and
Chongqing. China Overseas hasn’t been affected by property curbs imposed by the government yet, Kong said. The government measures will help control home prices in the short-term, though long-term demand will continue to be strong, he said. The government plans to build 36
million low-income housing units in its 12th state-wide “Five-Year Plan.” The plans won’t have a “big impact”
on the private residential market, says China Overseas. And Real Estate Group Co agrees. From its position as China’s second-biggest developer, it said this week that the current round of government-led restrictions won’t change its bullish outlook in the medium to long term.
Hong Kong | based fund for China
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