Egyptian developer Sodic dips further into red

What's Down: Interest for Egyptian luxury homes continues to wane. Six of October development swings to a full year loss of 193 million pounds, from a net income of 135 million pounds in 2010.

A property developer based in Cairo slid further into the red more than a year after the revolution that ousted president Hosni Mubarak.

Six of October Development and Investment Company (Sodic), a luxury property developer, posted a fourth-quarter net loss of 37 million Egyptian pounds, the result of slower-than-planned deliveries, cancellations and an impairment of 24m pounds. Net loss for last year reached 193m pounds, versus a net income of 135m in 2010, the company said in a statement to the Egyptian bourse yesterday.

Analysts have become less concerned about the results of Egyptian companies and if they don't meet expectations because of continued disorder in the country. Many analysts said they were more worried about the health of companies' balance sheets and their ability to execute new projects and secure pre-sales.

"I don't expect to see new sales take place and people running after new projects while there is instability in the country," said Marwan Shurrab, the chief trader at Gulfmena Investments in Dubai. "Most of the transactions are in the secondary market when there are hot deals but it's not like before when people were on an aggressive buying spree."

Sodic has not captured the middle-class segment, missing the real demand, Harshjit Oza, an analyst at Beltone Financial, told clients in a note on December 1.

Sodic has shown interest in building middle-income housing projects, but the company has not been able to secure land so far.

"Being a new entrant in this segment, the company's performance would depend, mainly, on its ability to buy suitable land plots at an attractive price, and to sell the units through bank mortgages," Mr Oza said. Property companies in Egypt are dealing with a string of legal challenges over their land holdings since a court ruled last year that a state deal with Talaat Moustafa Group, the country's biggest developer, was illegal.

Last month, Egypt's housing agency revoked a piece of land it had originally granted to Sodic to build its Eastown project. The property developer said it planned to appeal the decision.

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