Madinaty Master Plan - Talaat Moustafa Group

RISK FACTORSAn investment in the Shares involves a high degree of risk. Potential investors should carefully consider thefollowing information about these risks, together with the information contained in this offering circular, beforedeciding to purchase Shares. TMG’s business, results of operations and financial condition could be adverselyaffected by any of the risks described below. In such case, the trading price of the Shares could decline andpurchasers of the Shares could lose all or part of their investment.Some of the risks and uncertainties that Management believes are material are described below. However, theserisks and uncertainties may not be the only ones faced by TMG. Additional risks and uncertainties, including thosecurrently unknown, or deemed by TMG to be immaterial, could have the effects set forth above.Risks Relating to TMG’s Real Estate Development BusinessThe real estate assets of TMG are subject to material risks relating to real property.Factors that apply generally to the real estate development industry, many of which are beyond the control of TMG,may affect the economic performance and value of TMG’s properties, some of which may include:• changes in the national, regional and local economic climate (see “— Risks Relating to Egypt”);• general industry trends;• the limited geographic diversity of TMG’s city and community complexes and hotel complexes;• local conditions, such as an oversupply of similar properties or a reduction in demand for the properties;• the attractiveness of the properties to residential purchasers or tenants;• constraints on growth in demand for new housing due to the limited availability of financing, including theimmaturity of the mortgage lending market in Egypt;• governmental actions against TMG’s properties;• covenants, conditions, restrictions and easements relating to the properties;• governmental laws, rules and regulations, including in relation to financing, environmental usage, tax andinsurance; and• acts of nature that may damage the properties.Any negative change in one or more of these general factors listed above, as well as in the factors described infurther detail below, could adversely affect TMG’s business, results of operations and financial condition.The real estate assets under development are subject to additional construction and development risks.TMG’s development projects are also subject to the general risks associated with construction and developmentprojects, including the following:• TMG may incur construction costs for a project that exceed its original estimates due to increased material,labour or other costs, and such cost increases could make completion of the project uneconomical becauseTMG may not be able to increase sales prices of residential units or rental rates for pre-sold or pre-let units tocompensate for the increase in construction costs;• TMG may be unable to complete construction, sales or leasing of a property on schedule, which may result inbreach or termination of existing preliminary sales contracts with the government, termination of TMG’sownership rights in respect of the land or claims by third parties for damages;• TMG faces risks associated with construction activity at the properties, including delays, the imposition ofliens and defects in workmanship;• TMG may face shortages in raw materials or other construction inputs, such as, among others, cement, steeland energy and other utilities, or increases in their costs;• TMG’s contractors and other counter-parties may become bankrupt or insolvent;• TMG may be unable to sell properties at budgeted prices; and• occupancy rates and rents at newly completed properties may fluctuate depending on a number of factors,including market and economic conditions, and may result in TMG’s investments not being profitable.11