The escalating regional conflict between Iran and Israel casts a complicated shadow across Egypt’s real estate market. Property developers and industry experts see a dual challenge: real estate traditionally acts as a safe place for money, potentially boosting demand, yet the conflict also threatens to push construction costs higher through energy price shocks and disrupted supply chains.
The broader Egyptian economy is already feeling the pressure. Following the outbreak of hostilities between Israel and Iran, stock markets across Egypt and the Gulf states recorded sharp losses. On the first trading day after the conflict began, Sunday, Saudi Arabia’s benchmark index (.TASI) fell 1%, while Qatar’s index (.QSI) plunged 3.2%, marking its steepest single-day drop since April. Kuwait’s stock exchange (.BKP) sank 4.6%, with Jazeera Airways shares tumbling 18.4% amid airspace restrictions.
Moreover, Egypt’s EGX30 blue-chip index (.EGX30) slumped 4.6%, its largest daily drop in nearly 14 months. This included a 4.3% decline in Commercial International Bank and a 12.4% fall in investment firm EFG Holding. These significant market movements underscore the nervousness regional tensions create for investors.
A source familiar with foreign investment at the Ministry of Finance revealed that foreign investments totaling USD 1.5 bn exited Egypt’s debt market within just four days, driven by mounting fears of regional instability. This outflow directly impacted the Egyptian pound, which dropped by more than 85 piasters against the US dollar on Sunday, in the immediate aftermath of the conflict’s escalation.
Furthermore, in the days following the outbreak of the Iranian-Israeli conflict, the USD rate at the National Bank of Egypt jumped from EGP 49.82 on Thursday to 50.68 on Sunday, reflecting heightened market anxiety. By Monday, the rate had eased slightly to 50.28. The source indicated that this sudden escalation disrupted the government’s economic plans, with anticipated negative effects on both foreign and local investment flows.
Global oil prices surged on Friday, increasing 7% as tensions between Israel and Iran escalated. This raised concerns about wider supply disruptions across the oil-exporting region. The conflict intensified further after Israel targeted Iranian energy infrastructure late Saturday, including a major offshore platform in the South Pars gas field, a resource shared with Qatar and a significant source of Iran’s gas production. Such actions directly contribute to the economic uncertainty impacting Egypt.
A New Course for Developers: Delivery Comes First
Facing these pressures, developers stress the need for a fundamental change in how companies operate. They advocate moving away from focusing heavily on sales numbers and instead prioritizing their ability to complete projects. Success, they explain, no longer depends on setting sales records but on delivering projects on time and with the promised quality.
Developers express cautious hope for the market’s stability, assuming the conflict remains short. However, they warn that any significant increase in hostilities could force them to rethink pricing and project launch strategies.
Tarek Shoukry, Chairperson of the Real Estate Development Chamber at the Federation of Egyptian Industries, clearly stated that the intensifying conflict between Israel and Iran will surely have regional economic impacts that will affect Egypt’s property market. Shoukry pointed out that construction material prices represent the most important factor in real estate project costs. The ongoing war could impact these prices, especially if the Strait of Hormuz closes, which would have severe economic consequences for countries regionally and globally.
Shoukry believes the current market uncertainty demands a careful sales approach. Companies should sell a limited number of units in step with project construction to avoid the risks of sudden cost increases. Such increases could lead to delays or difficulties in finishing projects. He emphasized the importance of detailed financial planning to handle unexpected cost changes. He also advised against rapidly increasing long-term installment sales, cautioning that “this equation could backfire” if costs continue to rise faster than expected.
Property as a Safe Place for Money
Despite the economic concerns, demand for real estate typically increases during crises and wars. People view property as a safe asset for preserving wealth. Shoukry noted this trend, observing that not only in Egypt but also in neighboring markets, investors might turn to Egyptian real estate because of its relative stability during the conflict.
Also, Ahmed Shalaby, a member of the Ministerial Committee for Urban Development and CEO and Managing Director of Tatweer Misr, supports this idea. He stated that while fully assessing the crisis’s impact remains difficult, demand for real estate currently rises beyond expectations, reinforcing its role as a traditional safe place for money during troubled times.
Rising Costs and Execution Difficulties
On the other side of the equation, costs are increasing. Shalaby explained that potential energy price hikes and disruptions in supply chains could cause shortages in construction materials. This would place more burdens on developers who must deliver projects based on prices set before the crisis. In both scenarios — rising demand as a safe asset and increasing costs — property prices seem likely to go up.
Shalaby further added that while increased demand and rising prices might seem positive, they bring serious challenges for project completion. The biggest risk, he clarified, lies in the cost differences developers must absorb. “It’s true that we all implement hedging strategies, but there’s no way to guarantee where things are heading,” he commented. This holds especially true with the possibility of rising tensions and a potential closure of the Strait of Hormuz, which could send oil prices to record highs and put significant pressure on inflation.
Nevertheless, Shalaby stressed that companies have gained experience navigating recent crises. He believes Egypt’s real estate market maintains much of its growth potential, supported by political and economic stability, along with strong local and international demand.
Ayman Amer, General Manager of SODIC, noted that companies have built strong hedging strategies against sudden cost fluctuations. This gives them more flexibility to absorb shocks, provided these shocks do not last too long. He highlighted that the availability of construction materials remains crucial and could see effects on both quantity and price due to energy-related disruptions. Despite this, he expects the Egyptian market to remain one of the most stable, with sales figures likely improving in the second half of the year.
Sherif Mostafa, CEO of IGI Developments, confirmed that adopting careful sales strategies and focusing on completing existing projects represents the best approach for developers right now. He emphasized that companies have already achieved record-breaking sales over the past two years, and that 2025 and 2026 should focus on building and delivering. He reinforced the view that “success is no longer measured by sales volume, but by the ability to deliver.” Mostafa advised developers to follow a clear strategy: sell only the minimum necessary to ensure available funds and healthy cash flow, rather than pursuing high sales numbers.
He also observed that lower sales this quarter compared to last year should not be seen negatively. Instead, this may reflect a better understanding of the current situation. Mostafa added that most companies include an appropriate level of hedging when setting prices and estimating costs. However, he warned that if the US dollar exchange rate reaches EGP 55, it would create serious concerns and force companies to rethink their plans. He noted this scenario has not happened yet. He also cautioned that a surge in global fuel prices or worsening supply chain disruptions could trigger another wave of inflation and delay any expected interest rate cuts.
Ashraf Diaa, CEO of A SQUARED Consultants, stated, “Amid the escalating conflict between Iran and Israel, Egypt’s real estate and construction sectors are bracing for potential fallout, as the war’s ripple effects begin to surface across the region.” Diaa further explained that geopolitical tensions have caused sharp volatility in global oil prices, increasing shipping costs and the prices of imported construction materials. Egyptian developers already feel the pressure, reporting notable increases in steel and cement costs. These factors could disrupt project timelines, reduce profit margins, and prompt changes in pricing strategies.
Navigating Uncertainty and Embracing Local Solutions
“The current phase demands caution,” Diaa said. “We’re likely to see developers revisiting delivery schedules, reprioritizing projects, and focusing on cash flow stability over aggressive sales targets.” He also pointed out that a slowdown in Suez Canal revenues and disruptions to regional trade make the situation harder, adding strain to Egypt’s foreign currency reserves and increasing inflationary risks. These are key concerns for a sector that relies heavily on imports. Despite these challenges, Egypt’s property market continues to show strength. Diaa urged developers and investors to remain adaptable, adjusting spending plans, applying careful sales strategies, and preparing for what could be a challenging third quarter.
The escalating tensions, particularly the threat of closing the Strait of Hormuz, already affect Egypt’s building materials market. Hesham Ibrahim, Managing Director of Winvestor Developments, noted that cement prices have risen by approximately 15% over the past two months due to supply disruptions. Steel prices, after falling 20% earlier this year, have risen again by nearly 18% amidst increasing shipping and insurance costs. Ibrahim added that some imported materials are becoming harder to find, increasing risks related to reliance. Many developers now store essential materials in anticipation of greater supply chain disruptions.
Ibrahim stressed the need to re-evaluate imported construction inputs and prioritize locally made alternatives, such as aluminum and cladding. He sees this as a sustainable approach to reduce risk and maintain market stability. He concluded that the shift toward local products is now a strategic need, urging developers to adjust to quickly changing geopolitical dynamics to ensure project continuity and manage costs.
Government Response and Future Outlook
The Egyptian government has quickly formed a crisis committee. Prime Minister Mostafa Madbouly leads this committee, which includes the Central Bank governor and ministers of industry, planning, international cooperation, electricity, finance, supply, and petroleum, along with representatives from the Ministries of Defense and Interior, the general intelligence service, and the Administrative Control Authority.
This committee aims to monitor the consequences of the Iran-Israel military operations and prepare for unexpected situations across various sectors. The entire economic cabinet will remain in constant session to assess and address the war’s economic repercussions. The government also postponed the grand opening of the Grand Egyptian Museum, originally set for July 3, citing “regional developments” linked to the Iran-Israel war. A sudden drop in Israeli gas supplies to Egypt has also created a supply-demand gap of 1.0 to 1.2 bn cubic feet per day, adding another layer of economic pressure.
Despite these immediate challenges, Eng. Sherif El Sherbini Egypt’s Minister of Housing, Utilites and Urban communties sees rising regional tensions as a strategic window for Egypt to speed up its real estate investment and coastal urban development plans. Speaking at the ministerial session of the Builders of Egypt Forum, Minister El Sherbini presented New Alamein and other new cities as drivers of growth and investment. He outlined a national plan that seeks to attract foreign investment, export Egyptian real estate, and transform coastal cities into secure, sustainable centers. “Egypt’s coastal urban centres will play a critical role in driving investment and implementing major national projects,” he stated.
Minister El Sherbini detailed several elements of the government’s strategy. These include new ways to invest in land, forming regional investment partnerships with the UAE and Saudi Arabia, and steps to market Egyptian real estate to international buyers. The government will launch a specialized investment committee, coordinate with the Ministry of Justice for smoother ownership procedures for foreigners, and introduce a unified property identification number and a national property database.
Positioning New Alamein City as a main investment hub forms a key part of the plan. The minister announced the launch of Expo Alamein, a digital platform to promote investment windows. He also stated that real estate investment portfolios will be introduced over the next eight months. Plans also include developing an entertainment district, conference venues, wellness projects, and an industrial zone covering 15% of the city’s land. Additionally, around 40,000 residential units will be built under the “Housing for All Egyptians” programme to provide affordable homes.
To better control marketing activities, Minister El Sherbini added that a licensing system for real estate digital influencers is also being introduced. The government also plans to create a national unit for real estate market governance and a dedicated real estate export unit. “The time is right to turn Egypt’s coastal cities into sustainable urban centres that can attract regional and global investment,” Minister El Sherbini concluded.
Positive Outlook
The real estate sector in Egypt stands at a crucial point. It balances the historical attraction of property as a secure investment with the immediate and future effects of regional conflict on construction costs and supply chains. Developers’ collective experience and the government’s active steps aim to guide the market through these uncertain times, with a renewed focus on project completion, stability, and seizing strategic collaboration windows for growth.