Reviewing land contracts will open the door to more legal disputes, Sherine Nasr reports The scrapping of the initial contract to sell the Egyptian-Kuwaiti Investment Company 26,000 feddans of land in Ayat, Giza governorate is one of several measures that will be taken to restore lands that authorities claim have been sold below the market price to some businessmen. On Friday, a committee formed from the State Cases Authority (SCA) barred the initial contract on the ground that it was concluded based on a ministerial decree by former minister of agriculture Youssef Wali without acquiring the approval of other authorities, which is considered a flagrant violation of the law. Similarly, a few days earlier, the sale to Palm Hills Developments of around 960,000 square metres of land in Cairo suburbs was also ruled illegal under the claim that the New Urban Communities Authority (NUCA) handed the land to Palm Hills by direct order, which violated the auctions law. According to Mohamed Mahmoud Taha of the SCA, a specialised committee of judges from the authority has been formed to review the validity of the contracts for allocating the land which have been concluded during the former regime's reign. "The committee is entrusted with reviewing the contracts approved by the General Authority for Agricultural Development only. Land allocations for tourist or industrial purposes fall out of our jurisdiction," said Taha, who added that in most cases the lands were handed over to companies in order to be reclaimed as a means to increase agricultural productivity, "instead, these lands have been developed into high-end residential areas. Companies made big profits selling units in these zones," said Taha. Taha underlined the fact that the lands were utilised for purposes that differ from those they have been allocated for which invalidates the contracts. Another valid reason for scrapping the contracts is the fact that lands were sold below the market price at the time of sale. "Even if the articles of the contact are sound and correct, under-pricing the land is a form of corruption that will necessitate the barring of the contract," said Taha. While dozens of contracts are currently being reviewed, it is hard to overlook the fact that these contracts were concluded in accordance with the Egyptian law that contains many forms of discrepancies and contradictions. According to Harshjit Oza, research analyst in Beltone Financial, land allocations hinge on two conflicting laws. First, the law of NUCA issued in 1979 which gives the authority the right to allocate land through an auction or a direct offer made by the government. The second law was issued in 1998 and states that public land should be sold solely through auctions. "To reconcile this conflict, the former government had already drafted a new legislation for land allocation which was expected to be submitted to parliament before former president Mubarak was ousted," said Oza, who added that it is not foreseen when this new land sale law will be passed though it is important to speed the process "because the new law will simplify the whole procedure." Although the committee has given assurances that owners of residential units built on disputed plots will not, by any means, be harmed or become subject to any penalty, there have been indications that many of those who planned to buy units over disputed lands are backing off. "So far, we have not heard from the company and it has been very difficult to reach them. We did not know that the land was allocated for agriculture reclamation," said Nevine Ahmed, owner of a one-storey unit in Al-Suleimaniya, a multi-phase residential compound on the Cairo-Alexandria desert road. Ahmed paid the full cost of her unit and received it in 2010. She underlined that a new phase of the project is now under construction. To clarify its legal stance and fend against crimes such as encroachment on state's land and profiteering, Aradi Misr Company, owner of Al-Suleimaniya, published a whole page advertisement earlier this month explaining the legal framework through which the company has evolved. "However, recent announcements will make investors very cautious about buying any new lands," said Oza, who believes that property investors will be nervous about buying residential units from companies which have disputed land sales. "It is premature to assess the losses, but there will be a slowdown in the new booking and cancellation of contracts especially from overseas buyer who were planning on purchasing units in Hurghada and Sharm El-Sheikh," said Oza, who added that investors will clearly remain on the sidelines until the political picture becomes clear in Egypt.
