Egypt Bank May Buy Stake In DamacMonday, February 09, 2009
UAE developer Damac Properties is considering selling a large stake to an Egyptian bank. Egypt's government-controlled Housing and Development Bank (HDB) is studying a stake in Damac Properties, Reuters reported citing an HDB statement on Sunday. A Damac spokesperson declined to comment on the report when contacted by Gulf News. It is not clear how much the bank is looking to pay for the acquisition. However, the stake size could be as much as 51 per cent, according to financial newspaper Al Mal. An analyst at EFG-Hermes believes HDB may be looking to increase its capital to finance its own real estate investments. HDB also owns a real estate company in Egypt. We believe a change in ownership of Damac could be detrimental to the [bank's] Egyptian real estate company in the short term. We expect potential homebuyers would become concerned about the stability of developers, leading to a greater number of cancellations and even weaker sales.We would also be very concerned with any changes to the terms of contracts these buyers hold with Damac," Patrick Gaffney, an EFG-Hermes analyst, said in a statement. However, HDB management said the bank is just starting due diligence and no decisions have yet been taken, Gaffney added. Damac is Dubai's largest private developer and has a number of planned projects in Egypt worth a combined value of over $20 billion (Dh73.5 billion). The developer is keen to tap the huge demand for housing in Egypt, the Arab world's most populous country and has six projects underway there. Source: Gulf News
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