In Egypt, where more than two years of political and economic turmoil culminated in the ouster of President Mohammad Morsi almost three weeks ago, more people are deciding it’s a good time to buy a home. House prices  and sales are surging amid the street battles and demonstrations as Egyptians with cash seek to shelter it from high inflation and a plummeting currency. The value of midpriced and luxury homes  has risen by as much as 15 percent this year, according to Ankur Khetawat, an analyst at Cairo-based CI Capital Holdings. Construction companies from Talaat Moustafa Group  to Medinet Nasr Housing are reporting increasing revenue.
“The currency devaluation has been a blessing in disguise for the property market,” Khetawat said by phone. “It’s the best hedge for currency devaluation, especially with the scarcity of other investment avenues.”
Developers are seeing rising demand after the political discord and worsening economic outlook that marred Morsi’s year in office prompted Egyptians to protect their savings . The currency has fallen 11.6 percent since the central bank started easing its support in December, according to data compiled by Bloomberg, and inflation accelerated to 9.8 percent in June from 8.2 percent in May.
The revolution that ousted President Hosni Mubarak in February 2011 was a blow to developers building on more than 100 million square meters of land in and around Cairo as well as foreign companies that entered the market after economic reforms made in 2003 propelled more of the country’s 85 million people into the middle class. The conflict and uncertainty that followed starved the builders of buyers while the companies battled lawsuits over cheap land bought under the former regime.
The bank’s reduction of currency  support coincided with the recent surge in home prices, Khetawat said. Talaat Moustafa, Egypt’s largest developer by market value, said in May that first-quarter revenue jumped 17 percent to 1.52 billion pounds ($217 million). Annual net income is set to climb for the first time in five years, according to the average of eight estimates compiled by Bloomberg.
Sixth of October Development & Investment Co. reported sales of 1.6 billion pounds in the first half, equal to the total for all of 2012 and close to its full-year target of 1.8 billion pounds, managing director Ahmad Badrawi said in an interview.
The homebuilder, known as SODIC, sold more than 600 homes in the first phase of its Eastown project in the New Cairo suburb, compared with an initial target of 350, he said. The initial price of 5,800 pounds a square meter has increased by 15 percent, he said.
“What people are fearing in Egypt is runaway inflation, devaluation of the currency and currency controls,” said Loic Pelichet, an analyst at NBK Capital . “So how do you fight that? You buy a flat, the only thing that doesn’t depreciate.”
Egypt’s rebound is leaving out poorer Egyptians as developers focus on higher-margin homes for wealthy and middle-income buyers. A plan by the interim government that preceded Morsi to build 1 million low-cost homes in five years never materialized, according to Nermeen Abdul-Gawad, an analyst at HC Securities .
Mortgage interest rates of as much as 17 percent are keeping many would-be buyers out of the market and 90 percent of all transactions are financed by cash or through payment plans extended by developers, Abdul-Gawad said.
Home builders can generate profit margins of around 30 percent for properties costing from 600,000 pounds to 1.5 million pounds, she said. That compares with 7 percent to 12 percent for homes valued at less than 250,000 pounds. Midlevel homes range from 250,000 to 600,000 pounds.
Dubai’s Emaar Properties  PJSC and Majid Al Futtaim Holding LLC as well as Qatari Diar Real Estate Investment Co. and Barwa Real Estate of Qatar are among the foreign developers building homes and commercial properties in Egypt. None have announced changes to their plans since the military removed Morsi from power on July 3, a move that led to clashes that have left at least 61 people dead and hundreds wounded.
Majid Al Futtaim Holding LLC, a Dubai-based owner and operator of malls, is proceeding with the construction of a $600 million Mall of Egypt after getting approval during Morsi’s time in office, Chief Executive Officer Iyad Malas said by phone.
“Our experience was good,” he said. “We got any approvals we asked for because they had an interest in bringing foreign investors, like every government should.”
The company has tightened security at its shopping centers since Morsi was ousted to avoid a repeat of 2011, when its Maadi City Centre mall in Cairo was forced to close for two months after being looted and partially burned in the aftermath of Mubarak’s overthrow. Malas said if the situation gets drastically worse, the company may slow down construction on the mall and put new investments on hold, though a complete exit from the country is unlikely.
Egypt is a “core market” for Emaar, Dubai’s biggest developer said in an emailed response to questions on July 14. The company has invested more than 5 billion Egyptian pounds in the country and plans to spend more on developments including the commercial and residential Cairo Gate project in a joint venture with Al Futtaim Group.
Though sales are rising, developers aren’t immune to the political and economic shocks in the country and any plans would depend on how far the situation deteriorates over the coming months and years.
Egypt’s net international reserves are more than 50 percent below their December 2010 levels. Talks on Egypt’s bid for a $4.8 billion International Monetary Fund loan are on hold, the Middle East News Agency reported, citing designated planning minister Ashraf al-Arabi. Egypt’s economy may grow 2 percent this year, the slowest pace since 1992, according to the IMF.
A 10-person committee charged with amending Egypt’s constitution met for the first time Sunday. The meeting started a process meant to culminate in parliamentary and presidential polls.
The overthrow of two governments since 2011 and the process of forming a new administration will probably delay approvals of development land distribution and political instability may affect the supply of building materials, slowing construction of new homes even as demand rises.
While property sales have been recovering, they are far below the peak levels in 2007 and 2008, Khetawat said. Legal disputes over land purchased by developers during Mubarak’s regime continue to hang over the companies.
“The future of the market will hinge on how the new regime deals with issues such as the allocation of land and the disputes with developers,” Khetawat said. “Egypt needs a clear legal framework that provides checks and balances on the process of land distribution if it is to attract new developers and foreign investors.”
Madinaty, Talaat Moustafa’s largest project with 33 million square meters of land, is the subject of a case set to be heard on Sept. 24. As much as 45 percent of the undeveloped portion of the land, bought in 2005, may be revalued, Chief Financial Officer Jihad Sawaftah said in January.
Damac Properties Co., a Dubai-based private developer, has largely withdrawn from Egypt after it settled a dispute with the government in May. The company agreed to give up 30 million square meters of land on the Red Sea coast that it bought for $1 a square meter in 2006. The accord with Egypt’s government also gave the state full ownership of Damac’s Hyde Park development and the company agreed to pay 145 million pounds.
Damac’s retail and office project Park Avenue is still being built and many of the units are being handed over to buyers, the company said in a July 14 statement.
Developers are trying to hedge for risks resulting from the worsening security situation. Companies are trying to stock up on construction materials and are factoring in expected price increases as a result of a further depreciation of the currency, NBK’s Pelichet said. Projects could be delayed by disruptions to construction work and the supply of imported materials, he said.
“It’s not physically possible to hedge 100 percent now and if inflation accelerates more than developers had anticipated or if the currency depreciates 20 percent to 30 percent, it could be really risky for them,” he said.