Egypt's cabinet approved on Sunday the return of disputed land to the developer on which a $3 billion community is being built, in a case that has rocked the real estate market, the state-run agency said.
The cabinet said it accepted the recommendations of a legal committee which backed a high court ruling that annulled a land sale to the Talaat Moustafa Group (TMG), and said a new sale to the same group would be made.
Hisham Talaat Moustafa is an Egyptian business tycoon who was elected in 2004 to the Shura Council in the Parliament of Egypt and he is awaiting retrial for involvement in the death of Lebanese singer Suzanne Tamim.
TMG, the country's largest property developer, bought 8,000 acres of desert land from the state in 2005 to build a new city, Madinaty, east of Cairo.
A court last week upheld a ruling which found the sale -- worth $3 billion (2.2 billion euros) -- to be illegal because the property was not open to public auction.
A new contract will be signed between the authority and the group which does not contradict a ruling of the Supreme Administrative Court
Cabinet spokesman Magdi Radi
"The Egyptian cabinet has decided to end the contract of Madinaty that was concluded between the New Urban Communities Authority and Talaat Moustafa Group," cabinet spokesman Magdi Radi said in statements carried by the official MENA news agency.
"A new contract will be signed between the authority and the group which does not contradict a ruling of the Supreme Administrative Court," Radi said.
The legal committee found on Wednesday that the annulment of the contract meant the government could reclaim the land and legally "deal with it freely."
After the committee's recommendations, the government said on Wednesday it could once again sell the land to TMG because, under the law, a direct sale can be made in cases where the deal is for "the public good."
After Sunday's meeting, the cabinet said the new land sale would be made for "no less than 9,979,200,000" Egyptian pounds ($1.75 billion.)
The cabinet did not set a date for the signing of the new contract.
The court ruling saw shares in TMG dip before making a recovery, sparking fears that other huge real estate projects could face similar lawsuits