An Egyptian legal advisory body has ruled that the state land sale to Palm Hills Development, Egypt's second biggest listed developer, was illegal and has ordered it to be annulled.

"The contract signed between the New Urban Communities Authority and Palm Hills violated the auctions law because it was signed by direct order," the body said in a statement.

The lawsuit against Palm Hills, filed in September 2010 by Hamdi El-Fakharani, owner of a construction company, claims the contract, in which 960,000 square metres of land were assigned by direct order to the company, violates the law regulating tenders and auctions.

The families of former Housing Minister Ahmed El-Maghrabi and the former Transport minister, Ahmed Mansour, who are relatives, are main shareholders in Palm Hills. The transaction was approved in August 2006 during El-Maghrabi’s mandate as housing minister.  

After the January 25 Revolution, charges were brought against El-Maghrabi for profiteering and illicit gain from public funds. His trial will begin before the Cairo Criminal Court on 6 March.

Egypt's administrative court this morning postponed its review of the lawsuit calling for the annulment of the land’s sales till 22 March, in order to read the findings of the legal advisory body.