Egypt's Palm Hills (photo: Al-Ahram)
Egypt's second-biggest listed property developer, Palm Hills, reported on Monday it made a net loss of LE331.3 million ($55 million) last year, compared with a profit of LE526 million in 2010, as sales revenue plunged 67.6 per cent.
The firm suffered from last year's uprising that toppled President Hosni Mubarak and was followed by graft probes that froze sales and increased cancellations. Palm Hills is among several real estate firms facing legal challenges contesting its land acquisition deals with the state.
Analysts said they had expected a big drop in the company's yearly sales.
"We cannot say the results were unexpected. We expected a sharp drop in revenues due to the unsolved legal disputes between the state and the company on the land deals which made people less interested in buying from the company," investment and capital market analyst Nader Khedr said.
"Plus most of the firm's projects are in remote areas that many people now see as not safe given the drop in security in Egypt since the uprising," he added.
Khedr also blamed the losses on the general slowdown in the Egyptian economy after the uprising.
Real estate firms realise their revenues on delivery of units, which means that monies from apartments can take three or four years to appear on the year's financials. Construction was halted for during the worst of Egypt's unrest at the beginning of 2011 which has also affected developers' revenues.
However the land value of sold units is recorded on the books immediately, and the shrinkage in demand in 2011 caused a direct blow to the company's profitability.
Egypt's economy continues to suffer from worker strikes and political uncertainly, including a series of violent clashes against the ruling military council since the uprising, which have kept investors and tourists away.
The company's stock was down 4.7 per cent at LE2.05 by mid-Monday.