The Man Behind Egypt’s Real Estate Rebellion


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

By Zainab Fattah and Mahmoud Kassem, Bloomberg,

Hamdy El Fakhrany didn’t set out to strike a blow against Egyptian government corruption when he traveled to a state land auction in 2007. All he wanted was a quarter of an acre to build a house. The auction was canceled, as were the others he tried to attend over the next six months, the 53-year-old engineer says.

Finally, an employee at the Housing Ministry took him aside and told him how things worked in then-President Hosni Mubarak’s Egypt. “‘You are not Hisham Talaat Moustafa,’ he told me,” referring to the billionaire whose family founded the country’s biggest property developer, Talaat Moustafa Group Holding. “‘If you were, you would have been given 33 million square meters (355 million square feet) of land without an auction, and for nearly nothing.'”

El Fakhrany left the meeting determined to learn as much as he could about the Talaat Moustafa purchase, which occurred in 2005. He was initially barred from reading the contract. Even so, by relying on handwritten notes slipped to him by someone else at the ministry, El Fakhrany was able to build a case that persuaded a court in September to annul the land sale underpinning the 120,000-home Madinaty project on Cairo’s outskirts. An appeals court is set to review the ruling on June 21.

The size of the Madinaty deal and the government’s attempts to override the September court ruling fed into broader public criticism directed at Mubarak, his family, and corruption in Egypt. A popular uprising forced Mubarak to resign in February after 30 years in power.

The publicity surrounding Madinaty, Egypt’s biggest property development, prompted people to provide El Fakhrany with evidence of other suspicious land deals. He says he’s now the plaintiff in more than a dozen lawsuits targeting state officials and developers. “I’m not against private companies working, but why can’t they pay fair prices?” he says. “Those companies should not be an excuse to loot Egypt.”

El Fakhrany has already scored another legal victory. On Apr. 26 a court reversed a 966,000-square-meter land sale to Palm Hills Developments, Egypt’s fourth-biggest publicly traded developer, based on a suit brought by El Fakhrany that claimed the price was significantly less than the market value.

The panel of judges that annulled the transaction said that former Housing Minister Ahmed El Maghraby signed the Palm Hills sale document. El Maghraby owned a 4.6 percent stake in Mansour & Maghraby Investment & Development, which in turn holds 55 percent of Palm Hills, according to a company filing. El Maghraby has been arrested on charges of squandering public funds and profiteering in connection with the case. He could not be reached for comment.

El Fakhrany is preparing additional lawsuits, saying he has received enough documents to file 76 cases that challenge 126 projects. The contracting business owner says he is working with his daughter, Yasmin, a dermatologist, and using his own income to cover legal costs.

El Fakhrany’s campaign, along with the uncertainty stemming from the toppling of the Mubarak regime, has thrown Egypt’s real estate industry into turmoil. Stocks of publicly traded developers have tumbled as sales plummet and customers cancel deals. Shares of Talaat Moustafa are down 50 percent this year. In December, El Fakhrany was named “Egypt’s First Fighter of Corruption” for 2010 in an event organized in part by the syndicate of journalists in Egypt. He received a prize of 5,000 Egyptian pounds ($840).

As for the Madinaty project that started El Fakhrany on his quest, a court order finally made the development’s land contract available for review. While El Fakhrany knew some of the details, he was shocked when he read the document closely. Under the 2005 deal, which was completed without a public auction, El Fakhrany says, the state was entitled to 7 percent of the residential properties built, while Talaat Moustafa would get 93 percent. The government also agreed to exempt the developer from all taxes and fees incurred during construction, including import duties on construction materials, and relinquished rights to any commercial or retail space. “The deal couldn’t have been any more slanted on the side of the developer and against Egypt,” El Fakhrany says. “It was like it was drafted by an enemy of the state.” While investigating the Madinaty case, El Fakhrany discovered that a Cayman Islands-based fund called Horus Private Equity Fund III was a shareholder in Talaat Moustafa Group and lists Mubarak’s son Gamal as one of its owners.

Jihad Alsawaftah, chief financial officer at Talaat Moustafa, didn’t respond to calls and e-mails seeking comment. Construction on the site continues while the case is in court. Hisham Talaat Moustafa, the former chairman of Talaat Moustafa, was convicted in May 2010 of paying a former police officer to kill his former girlfriend, Lebanese pop singer Suzanne Tamim. His sentence was reduced from death to 15 years in prison after a retrial that ended in September.

During an interview in a Cairo cafe, a woman approached El Fakhrany and asked if she could contact him and provide some documents to review. She thanked him for his work. “All the land, which was acquired through corruption, must be returned to the country, or those companies must pay the fair value for it,” El Fakhrany says. “Only then we will settle and let the projects go on.”

The bottom line: El Fakhrany’s challenges to land deals in Egypt are uncovering corruption and upending the real estate market.


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