By: Noura Yousef
Mohamed Omar (not his real name) is a 31-year-old middle income earning Egyptian. Like many others, he is in search of his “apartment of a lifetime.” But Omar’s options are severely limited, given his economic situation. This is steadily worsening, because of the continuing rise in property prices and the “unfair” pricing of housing units for those on middle incomes.
Amid his despair over the housing options available to him, Omar is haunted by television advertisements put out by the Talaat Mostafa Group (TMG) – one of the largest property development companies in Egypt – for its huge projects, like “Madinaty” and “Noor.” These advertisements target a social class far removed from the middle class in which Omar hopes to maintain a foothold, despite the deteriorating economic situation that many like him face, and is caused by the unprecedented collapse in the value of the local currency against the US dollar.
Latest advertisement from TMG
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Madinaty and Noor are two projects over a decade apart, but the link between them is businessman Hisham Talaat Moustafa, the face of TMG. During the period when these projects were established, several pieces of evidence emerged that raise doubts over the fairness and transparency of the Egyptian government’s handling of the allocation of land for property investment.
Even though a court ruled invalid and illegal the procedure under which the land for the Madinaty project was allocated, the process by which land for the Noor project in 2021 – and the Celia project in 2018 – came to be acquired by TMG remains obscure, because of laws approved by the Egyptian government. It seems that this obscurity has served the interests of the major property developers in the Egyptian market.
In this article, we trace how Egyptian and Arab businessmen and property developers have benefited from changes made by the Egyptian government in the process by which land is allocated in the country. These have led to both lack of transparency and unfair distribution of land, and Hisham Talaat Moustafa has turned out to be the biggest beneficiary of these changes.
TMG has become well known in the Egyptian property market, for its influence, and for being one of the first companies to own vast swathes of land on which to build integrated cities. It began with Al-Rehab in 1996, leading up to Madinaty, the group’s largest project, for which the contract was made in 2005, in a deal with the Urban Communities Authority that broke Law No. 98 of 1998 on tendering and bidding.
“The process of contracting to purchase or lease property must be preceded by the issuing of a decision to that effect by the competent authority, and the announcement of the purchase or lease and the terms of each shall be made in accordance with the rules set out in executive regulations.”
“The sale and rental of fixed and moveable property, and of projects that have not acquired legal personality, and the licensing of use or exploitation of property, including tourist establishments and restaurants, shall be made through a public or local bidding process or through sealed bids.
On 1 August 2005, Hisham Talaat Moustafa, who had a working relationship with the sons of former President Mohamed Hosni Mubarak, managed to obtain a contract from the New Urban Communities Authority of the Ministry of Housing to acquire over 8,000 feddans of land (33.6 million square metres – a feddan being equal to 4,200 sq m) in Heliopolis to build Madinaty. This land accounted for over 11 percent of the entire land area of Heliopolis, and the contract was issued under a cost-free direct order system.
Yahia Shawkat – head of the company “10 Tooba”, which specialises in studies of the urban environment – maintains that the Madinaty contract was a clear violation of the tender and auction law.
Under the Mubarak regime, Hisham Talaat acquired both political and economic influence in Egypt. As well as his huge property projects and his friendships with the president’s sons, he remained a member of the Shura Council and the policy committee of the now dissolved National Democratic Party.
Nor were Hisham Talaat Moustafa’s activities limited to his huge property development business projects in the expanding Egyptian capital. While achieving success in such projects, he was also active in registering companies and bank accounts in tax havens.
In 1999, only two years after obtaining the contract to build Al-Rehab City, Hisham registered Bellfarm Enterprises Limited in Cyprus and remained at its head for 22 years without declaring its activities and projects in Egypt. A year before signing the Madinaty contract, Hisham Talaat Moustafa opened a bank account in Switzerland, according to the collaborative media project “Suisse Secrets”. This finding was based on bank account data leaked from Swiss banking giant Credit Suisse, which the German newspaper Süddeutsche Zeitung obtained and shared with the Organized Crime and Corruption Reporting Project (OCCRP) and 46 other media partners around the world.
UK records show that, two years after the signing of this contract, Quains Real Estate – a company owned by Hisham Talaat Moustafa and registered in Guernsey – purchased property in Britain on May 24, 2007, worth £3.4 million sterling.
Egyptian legal expert Khaled Ali says that the handing out of land has become the shortest route to riches for businessmen. “They obtain land for next to nothing, and then sell housing units to people off the plans. They collect the money and then build at the citizen’s expense, making profits without needing to put in any capital.”
But things turned upside down for Hisham Talaat Moustafa when he was found guilty of the murder of Lebanese singer Suzanne Tamim in 2008. Investigations showed that he had pursued her from Cairo to Dubai and threatened her. Tamim’s actual killer, Mohsen Al-Sukkari, a former officer in the National Security Service (one of the agencies of the Ministry of Interior, which was called the State Security Service during the rule of former President Mubarak) said that he had murdered her on instructions from Hisham Talaat Moustafa and in return for two million US dollars.
In 2009, at the same time as Moustafa and al-Sukkari were convicted and sentenced to death by hanging, the contract for the Madinaty project first came to light. Lawyers for the Egyptian Center for Economic and Social Rights used it to file a lawsuit against the TMG-affiliated Arab Company for Projects and Urban Development in 2010.
Hisham Talaat Moustafa and Mohsen Al-Sukkari sentenced to death by hanging
Khaled Ali says: “The New Urban Communities Authority claimed that it would receive compensation in-kind for the land, namely a number of residential units after the construction was completed. The Ministry of Housing went ahead with providing all services, including water and electricity, up to the edge of Madinaty land perimeter, so making it easy for businessman Hisham Talaat Moustafa to develop the area.”
Moustafa was not the only person to win contracts with the Egyptian government, represented by the New Urban Communities Authority, which broke the law. On August 23, 2006, Palm Hills Development, a company in which the Mansour and Al-Maghrabi families hold the majority of shares, managed to acquire 230 feddans of land (966,000 sq m) in the eastern expansion of Heliopolis for 241.05 million Egyptian pounds ($42.3m according to the exchange rate of that period). This meant one square metre of land was priced at a mere 250 Egyptian pounds ($44), though this deal was in the end struck down by a court ruling.
The state protects three types of property: public property, private property, and cooperative property.
Public property is inviolable and may not be encroached upon, and protecting it is a duty under the law.
On June 22, 2010, the Supreme Administrative Court of the State Council in Egypt declared invalid the contract for the sale of Madinaty in what human rights activists described at the time as a historic ruling. This was followed less than a year later by a similar ruling that struck down the contract between the government’s New Urban Communities Authority and Palm Hills – a company in which the Mansour and Al-Maghrabi families are the main shareholders – to build on 230 feddans of land in the eastern expansion zone of Heliopolis.
The Palm Hills Development group, whose CEO and chairman of the board is billionaire Yassin Mansour, manages assets worth $2.2 billion and holds a land portfolio of over 34.6 million square metres.
Yassin Mansour, CEO of Palm Hills, is ranked 2,255th on Forbes’ list of the world’s richest people. On August 15, 2023, he was estimated to have a fortune of $1.3 billion.
In 2018, Palm Hills Development was again able to secure a contract with the Egyptian government for large areas of land. This was a directly awarded contract, not subject to any public tender or bidding process, and no details of it were released by the New Urban Communities Authority, because of the Egyptian government’s decision to amend several laws regulating land allocation and oversight of government contracts.
These amendments barred any oversight of Egyptian government contracts dealing with land allocation. They also prevented civil society organizations from subsequently exercising any oversight role over these contracts using the courts, like the lawsuit which engineer Hamdi Al-Fakharany brought when he found himself unable to obtain a plot of land under the law governing tenders and bids. This legal action, known as the “My City” case, was led by a team of lawyers from the Egyptian Center for Social and Economic Rights, including Khaled Ali, and ultimately resulted in the Egyptian treasury recovering millions of pounds.
After the original Madinaty contract was ruled invalid, the Egyptian government managed to sign a new contract for the scheme, which included a mechanism enabling the government to acquire an estimated seven percent of the total construction area as payment in kind, provided that this was worth no less than 9.98 billion Egyptian pounds ($1.65 billion). The project comprises 3.195 million square meters of fully finished buildings, according to TMG’s financial report. The new contract was issued with the approval of the Council of Ministers on November 8, 2010, a few months before the fall of the Mubarak regime.
As of the date this report is published, construction work is continuing on the Madinaty project east of Cairo, and TMG is offering housing units to the public at prices that are continually going up. In its latest offer, in April 2023, the cost of a residential unit in the city measuring 133 square metres was about five million Egyptian pounds ($161,700), with the cost of the maintenance deposit on top.
At an economic conference, organized by the Egyptian government in October 2022 under the title “A Roadmap for a More Competitive Economy,” Hisham Talaat Mostafa boasted of the profits he had provided to the Egyptian state. This was some years following his release from jail, after receiving a presidential pardon over his conviction for the murder of Lebanese singer Suzanne Tamim. “The state’s total share in the Madinaty project is up to now around 60 billion pounds (about $3.06 billion). That represents 85 percent of the ministry’s total share in the project.”
Hisham Talaat Moustafa discusses his group’s profits over recent years
When Abdel Fattah El-Sisi became Egypt’s president in 2014, plans for the construction of new cities were at the top of his agenda. And his priority was the New Administrative Capital, whose construction costs rose above $59 billion in about six years.
Before the presidential pardon was issued in April 2017, TMG Holdings acquired 500 feddans of land in the New Administrative Capital for an integrated housing project. The value of the contract was around 4.4 billion Egyptian pounds, equivalent to $242 million dollars at the time. This was to be paid in local currency in instalments over nine years. Today this project is known as “Celia”.
TMG achieved a 93 percent increase in sales of residential units in 2018, driven by sales in the Celia scheme, where units were launched for the first time in June that year. Celia sales reached 12 billion Egyptian pounds ($655 million) in the first six month they were made available.
But at the same time as major property companies in Egypt, led by TMG, are boosting their profits, young people’s dreams of owning an apartment where they can set up a marital home of their own are being shattered.
Mohamed Omar is one of these young people, who have been forced by economic conditions and the “greed” of property company owners to put off virtually indefinitely his dream of owning a marital home.
The reason is that owning an apartment is one of the basic conditions put by any bride’s family in Egypt, to agree to a marriage going ahead. It has become a priority, given spiralling rents and the drop in “middle class” salaries with the decline in the value of the Egyptian pound against the dollar. So says Omar, who receives a monthly salary of eight thousand pounds ($258.8) for his work as a researcher at a study centre in Cairo.
“If I get a million pounds together, how much will a flat cost by then? I can see the apartment in front of me, but as I reach out for it, it just gets further away.”
The price for a 119-square metre residential unit in the Celia project in the New Administrative Capital is about 4.284 million Egyptian pounds (143 thousand US dollars), payable in instalments over 11 years, according to the sales team at TMG Holdings. This equates to the total Omar would earn in 45 years.
At the same time as Hisham Talaat Moustafa became active again in property development, he also resumed his dealing with tax havens, but this time through his sons Omar and Tarek. These two took a stake in a new company called Moon Jet, based in the principality of Liechtenstein, which sits between Austria and Switzerland. This is a company specialised in investing and managing private assets, including planes. Since 2008, Tarek Moustafa has been chairman of the board and managing director of the company, whose listed assets include a Falcon 2000LXS plane worth CHF 28 million.
With the government showing an interest in real estate, there was a return to the practice of allocating land for investment to major property developers. The two largest deals went to TMG and Palm Hills, following Cabinet Decision No. 25 of 2019, which changed the law governing land allocation from The Bids and Tenders Law No. 89 of 1998 to a system of land allocation by direct order.
“Transactions covering the selling, leasing, or licensing of property for their use and exploitation in cases of necessity for social and economic ends dictated by public interest shall be carried out by direct agreement, in accordance with the provisions of Article 80 of the law regulating contracts concluded by public entities.”
Allocation of 3,000 feddans to the group Palm Hills Development
Legal expert Khaled Ali believes that the law allowing land allocation by direct order has done away with fair distribution of land, contributed to a lack of transparency, and has even given a veneer of legality to previous “illegal” contracts made between businessmen and the state.
On January 17, 2021, the Ministry of Housing resolved to grant five thousand feddans (2.1 million square meters) of land to the Arab Company for Urban Investment, owned by Hisham Talaat Moustafa, to establish Noor City in the Gardens area opposite the New Administrative Capital.
The ministerial decision issued on August 16, 2021, stated only that “a payment in cash and in kind,” was made in return for this ministerial grant, and that the Arab Company for Urban Investment paid 13.86 million Egyptian pounds ($887,000), an amount representing ten percent of administrative expenses. Hisham Talaat Moustafa revealed further details of this exchange, however, in television interviews.
In 2021, Hisham Talaat Moustafa liquidated Bellfarm Enterprises Ltd that was registered in Cyprus, which he had set up two years after winning the contract to build his first integrated city, Al-Rehab. He dissolved Bellfarm the same year that he entered into contract with the Egyptian government to build Noor City.
Records show that a company called Planet Hollywood Egypt Ltd, was established in the Cayman Islands in 1998, headed by Hisham Talaat Moustafa, CEO of TMG, Marwan Shehadeh, Firas Al-Khushman, and Zaki Al-Jaziri.
According to these records Planet Hollywood Egypt was “active”, but it was not clear what type of activity it was engaged in, what projects it was working on, and what role these prominent businessmen played.
Human rights lawyer Khaled Ali says that the Egyptian government justified the change to the law on land allocation by the need to streamline the process of contracting and investment. But what happened in fact was that large areas of land were given to particular businessmen and not others, without the clarification justifying these handouts. Nor was it evident if these were the only people capable of carrying out urban development, and if the best financial return for the land had been achieved. Indeed, people had no right to know what the value of the land was, according to Khaled Ali.
The deals won by Hisham Talaat Moustafa in the New Administrative Capital, following his presidential pardon, were with the New Administrative Capital Company, which is responsible for contracts covering all projects within the Capital. This company is owned by three parties: The New Urban Communities Authority, the Armed Forces Lands Authority, and the National Service Projects Organization. The company was established by presidential decree in 2016, with a capital of 20 billion Egyptian pounds, according to press statements by Khaled Abbas, head of the New Administrative Capital Company.
head of the New Administrative Capital Company talks about its activities in a TV interview
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In September 2022, a study entitled “Who Owns Cairo,” by the 10 Tooba company, which specializes in urban studies, revealed that property development companies belonging to particular families (such as Mansour and Talaat Moustafa) own roughly 36 percent of all land holdings in Cairo. Most of this land is owned by only seven investors, who hold controlling shares in five property companies, which are among the ten largest such companies listed on the Egyptian Exchange.
InvestorEgyptian government: Heliopolis Company for Housing & Development; Housing and Development Bank; Nasr City; in addition to private sector shares, e.g. Palm Hills and TMGTalaat Moustafa GroupBin LadenUAE governmentMansour familyAl-RashedAl-Maghrabi
NationalityEgyptianEgyptianSaudiEmiratiEgyptianSaudiEgyptian/Saudi
Share of land16%14%6.9%6.2%4.6%3.3%2.5%
Number of feddans6400560028002500190014001000
Some governments, such as the UAE, Kuwait and Norway, own a share of these lands, as well as Saudi and Egyptian family companies, like those of the Bin Laden, Al-Rashed, and Al-Maghrabi families.
Leading all of them – and immediately following Egyptian government companies – is Hisham Talaat Moustafa and his property group.
Location
Land area in feddans
Principal land
Legal ownership in 2021
Control in 2021
Since his release from prison by a presidential pardon, Hisham Talaat Moustafa has often appeared next to the prime minister or minister of housing at major economic and urban development conferences in Egypt.
While these meetings are not a sign of friendship between him and officials, they do show that he more or less “reconciled” with the state. Hisham Talaat Moustafa often makes million-dollar donations to organisations such as the Tahya Misr Fund. In April 2020, TMG donated 62 million Egyptian pounds to combat the Corona crisis, including 25 million pounds to Tahya Misr. The presidency had announced the setting up of this fund on July 1, 2014, with the aim of “supporting” the Egyptian economy.
On May 22, 2020, less than a month after this generous donation, Presidential Decree No. 232 was issued pardoning former state security officer Mohsen Al-Sukkari. He had been sentenced to life imprisonment (after his death sentence was commuted) for the murder of Lebanese singer Suzanne Tamim, at the instigation of Hisham Talaat Moustafa. Al-Sukkari remained behind bars, however, for other crimes.
Yahia Shawkat, president of “10 Tooba”, points out that allocating vast swathes of land to a limited number of companies in a single new city, allows these investors to control the price of residential units and to monopolise the Egyptian property market.
With the change in land allocation procedures in 2019, it became difficult to obtain details of contracts between the state and property developers, and to find out the actual value of deals, such as that for Noor City, between Hisham Talaat Moustafa, and the Egyptian government. These “changes” also took away the right to go to court to challenge the procedures for allocating these lands.
The Egyptian state issued Law No. 32 of 2014, to regulate the procedure for appealing against state contracts. This law stops the filing of appeals against any contract concluded by the Egyptian government, whether with the private sector or with foreign entities.
For eight years, there have been attempts to appeal against this law, and on January 14, 2023, the Supreme Constitutional Court threw out the case, submitted by the Egyptian Center for Economic and Social Rights (CESR), that the law was unconstitutional. This has deprived the public of the right to challenge the validity of state contracts and the disposal of public property – a right laid down in the constitution:
The state’s natural resources belong to the people. The state is committed to preserving, properly exploiting and not depleting them, considering the rights future generations have to these resources.
Public property is inviolable, may not be infringed upon, and must be protected in accordance with the law.
The Constitutional Court’s justification for rejecting the CESR’s lawsuit was that the national economy was going through “a delicate phase, in which it needs to work hard to attract foreign investment and avoid anything that could undermine confidence in the soundness of the economy, while ensuring that the state adheres to its contracts.”
Before the legislative amendment, citizens had the right to challenge in court the validity of contracts to which the state was a party and to see on what basis these contracts were made.
Lawyer Khaled Ali says: “In the decades before this law came into force, there were many judicial rulings against the sale of companies. The government therefore amended the law so that only the two parties to the contract would have the right to appeal against it or challenge it in court. In cases like the sale of the Omar Effendi company, workers no longer have the right to file a lawsuit against its sale, even if there is evidence of corruption.”
Ministry Resolution No. 537 of August 16, 2021 discloses the contract made between the New Urban Communities Authority and the TMG-affiliated Arab Urban Development Company for the Noor project, under which the authority was to receive both material and in-kind returns from the project. But the contract gives no details of the total amount the authority would receive or how this would be obtained. It does, however, state that the company is obliged to pay 13 million Egyptian pounds ($828,000) in land fees.
Lawyer Khaled Ali warns that the current state of the Egyptian property market has produced “exaggerated” pricing of some property units and a lack of oversight.
Average exchange rate: 16 EGP to the dollar
Average exchange rate: 16 EGP to the dollar
Average exchange rate: 30 EGP to the dollar
The net profits for TMG Holdings increased by 34 percent during the first nine months of 2023 to 2.68 billion Egyptian pounds ($87 million), compared to 1.99 billion Egyptian pounds ($64.56 million) for the same period in 2022.
In November 2023, the group submitted a statement to the Egyptian Exchange saying it had achieved unprecedented business results in the first nine months of 2023, with contractual property sales reaching 93.14 billion Egyptian pounds (three billion US dollars). TMG described this as historic record for the property sector in Egypt.
While Hisham Talaat Moustafa continues his steady “penetration” of the Egyptian property market, making profits in the millions of dollars, Riyadh al-Azzawi, the husband of Lebanese singer Suzanne Tamim, has taken legal action against him in the UK. We were unable to acquire details of this lawsuit by the time this report was published.
However, in August 2023, some six years after obtaining a presidential pardon, Hisham Talaat Moustafa was able to obtain a judicial ruling from an Egyptian court restoring his reputation in relation to the murder of Suzanne Tamim. And now he is leading the most important property development projects in the Egyptian market.
