CAIRO: Talaat Moustafa Group, Egypt's biggest listed developer, posted a 48 percent drop in first-quarter net profit on Wednesday, but the group's shares jumped on hopes of an end to legal wrangles over land deals. The shares responded to market talk that Egypt's interim military rulers are considering new legislation to put an end to land disputes that have overshadowed the real estate sector. Talaat Moustafa's shares were up nearly 8 percent by 1143 GMT and shares in peer property firm Palm Hills were up more than 5 percent. "The stock is not really driven by earnings at least for now. It's more about what is happening with the land disputes," said Ankur Khetawat of HC Securities. "The earnings will not really have much impact because everyone knows what happened in the first quarter," he said. Some traders said the company's results were not as bad as expected, considering the crisis in the property sector. Talaat Moustafa (TMG) is at the center of a legal row because of conflicting laws governing state land sales. The lawsuits, which began last year, have thrown Egypt's once-booming property sector into crisis and have gathered pace since mass protests toppled President Hosni Mubarak on Feb.11. Palm Hills and Egyptian Resorts have already lost land. Land dispute TMG's $3 billion Madinaty project, which makes up the bulk of its land bank, has been caught in a dispute since September, when a court upheld a ruling that scrapped a sale of state land to TMG because it was not auctioned. TMG's original contract with the government for Madinaty was scrapped last year but the cabinet returned the land to the company under a new deal on the same terms based on its right to act in the national interest. But since the ousting of Mubarak and his cabinet — which signed the deal — the fate of that contract remains unclear. It is being contested in courts, with a hearing later this month. TMG said its real estate sales and tourism revenues dropped by half because of the political turmoil that raged for most of the quarter but payments due to the company had remained within "a normal range". "The bigger issue is not about tourism or sales in this quarter. The market knows that all real estate companies have a tough time ahead of them. The bigger issue is on land," said Hisham Halaldeen of Naeem Brokerage. TMG shares have lost 54 percent of their value since the start of the year as investors have fretted about its cash position. Legal uncertainties over the company's land holdings dampen the prospects for new sales, leaving it more reliant on cash reserves to weather the downturn, analysts say. Net income fell to LE 169.4 million ($28.5 million) from LE 324.1 million in the same period a year earlier. Revenues were LE 1.4 billion, down from LE 1.6 billion. –Additional reporting by Tom Pfeiffer and Isabel Coles
