Homebuyers in Egypt could see delays in delivery and even the cancellation of projects amid government investigations into corruption, a report says.
"The most significant area of uncertainty lies in the validity of legal title offered by major developers, which are viewed as benefiting from the patronage of the previous administration," said a report from Jones Lang LaSalle, a property consultancy.
"These concerns could result in a prolonged period of inactivity, delaying the recovery of the real estate market," the report said. Jones Lang LaSalle added it also expected about a 25 per cent decline in the supply of new office, residential and retail space as projects were cancelled.
Since the resignation of Hosni Mubarak from the presidency on February 11 amid a civil uprising, prosecutors have opened dozens of corruption investigations of top businessmen tied to the Mubarak government.
Among the businessmen and officials bring investigated are Yasseen Mansour, the head of Palm Hills Development, and Ahmed Maghrabi, a former housing minister. Investigations have pulled in UAE property companies that have investments in Egypt, including Damac Properties and Al-Futtaim Group. Neither company is accused of wrongdoing.
Jones Lang LaSalle said the property market in Egypt - which before the revolution was one of the fastest growing in the region - had slowed considerably from the beginning of the year. Fewer tenants are moving, deals have fallen apart and the number of transactions has dropped.
But the company said it expected a strong recovery in the medium to long term because of the "fundamentals" of Egypt: strong demographics; a cultural connection between property and marriage; and the country's strategic location.
"We are confident that the current situation is only temporary," said Ayman Sami, the head of the Egypt office of Jones Lang LaSalle Mena.
