x Abu Dhabi, UAE Thursday 20 July 2017

Al-Futtaim positive its troubles with Cairo Festival City are over

The resolution of a land dispute in Egypt paves the way for Al-Futtaim to secure fresh funds for its Cairo Festival City project.

Al-Futtaim's Festival City Mall in Dubai. Randi Sokoloff / The National
Al-Futtaim's Festival City Mall in Dubai. Randi Sokoloff / The National

The resolution of a land dispute in Egypt involving Al-Futtaim Real Estate's Cairo Festival City project should pave the way for the Dubai company to borrow 2 billion Egyptian pounds (Dh1.21bn) to help complete the sprawling retail development.

The company believes it is close to reaching an agreement on the land dispute that arose from contracts brokered under the administration of Hosni Mubarak, the ousted Egyptian president.

"What will happen is that we will finally draw down a 2bn Egyptian pound loan, which is awaiting resolution of the land issue," said Marwan Shehadeh, the director of corporate development at Al-Futtaim Group. "That will be a huge positive for us."

Mr Shehadeh said the loan from banks was ready but was being held up until the land issue was resolved.

He said the dispute had been a "huge cloud" over the development of Cairo Festival City, the group's flagship project in Egypt.

"We are hopefully in the final stages of finalising the land issue," he said. "We are comfortable with our legal situation, so we have not stopped. We have been progressing the construction and going ahead using our own equity."

Mr Shehadeh declined to comment on the details of the deal Al-Futtaim had made with the Egyptian authorities over the price of the land.

He said Cairo Festival City was expected to open before the end of the year. The development, based on the Dubai Festival City shopping and entertainment project, is to include shops, homes and offices, with two hotels also planned.

The project has been slated to be completed by 2015. The 200 apartments that make up phase one of Festival Living, launched last year and on which some building work has already been carried out, sold out within a week, according to Al-Futtaim.

An Egyptian government commission has approved the settlement of land disputes with Al-Futtaim and Dubai's Damac Properties, Bloomberg News reported. It was reported that the two companies would pay an additional sum to bridge the gap between what they paid for the land under the previous government and what the current authorities deem a fair value. This early agreement is expected to be submitted for final government approval this week.

Damac Properties declined to comment.

Hussain Sajwani, the chairman of Damac Properties, was sentenced in absentia to five years in prison and fined US$40.5m (Dh148.7m) in May after an Egyptian court convicted him of corruption. Mr Sajwani filed an arbitration lawsuit in Washington against Egypt to overturn the judgement.

Mr Sajwani was convicted for his role in purchasing land in Gamsha Bay from the Egyptian government in a 2006 deal involving Zuhair Garranah, the former minister of tourism, who was found guilty on corruption charges. Mr Sajwani denied the accusations.

rjones@thenational.ae

rbundhun@thenational.ae

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