Major real estate developers in Egypt have increasingly turned their attention to the luxury housing segment in recent years, driven by its ability to deliver high profit margins and be rapidly marketed to specific client segments.
The launch of “The Spine” project by the Talaat Moustafa Group east of Cairo, with investments exceeding LE1.4 trillion, is one of the latest examples reflecting this shift towards higher-priced, premium real-estate products.
Despite the sector’s momentum, data from the Central Agency for Public Mobilisation and Statistics (CAPMAS) reveals a striking paradox. According to the 2017 census, around 29 per cent of Egypt’s housing units are either vacant or closed.
Some are unoccupied due to their owners living abroad or owning alternative residences; others remain under finishing; some are unfit for habitation or in need of renovation; and a significant portion is held purely as a store of value.
The phenomenon reflects what some experts describe as the “locking in of investments” within the real estate sector, where substantial savings are directed into underutilised assets, reducing the efficiency of capital allocation in the economy.
Others, however, argue that the sector should not be blamed for its attractiveness, and that other sectors, such as industry or tourism, should instead be incentivised to compete for investment.
The government views real estate as a key engine of economic activity, given its extensive supply chains that include industries such as steel, cement, and building materials, in addition to its role in job creation and growth support.
Estimates indicate that the sector contributes around nine to 10 per cent of GDP, according to the Central Bank of Egypt data.
Hassan Al-Sadi, a professor of economics at the Faculty of Commerce at Cairo University, believes that the existence of a high proportion of vacant units represents a burden on the economy.
“We do not have the luxury of immobilising capital in apartments that remain closed,” he said, calling for legislative intervention through policies that incentivise directing investments towards sectors the state is seeking to develop, such as tourism and industry, particularly those relying on local inputs and contributing to foreign-currency generation.
Al-Sadi said that improving the efficiency of investment allocation remains a key challenge.
“Real estate developers have the right to operate, and their role cannot be denied, but the state also has the right to enact laws that safeguard the economy and people’s wealth and guide it in the right direction,” he said.
He proposed imposing penalties on vacant residential units to encourage their owners to offer them for rent, which could increase supply, improve market balance, and ease price pressures.
He also noted that the expansion of real estate investment is partly driven by psychological and media factors, pointing out that “the media coverage and intensive promotion of real estate as a safe investment haven did not exist in this form 50 years ago.”
This has pushed many individuals to channel their savings into property purchases, even without genuine need, he added.
Monsef Morsi, managing director and head of research at CI Capital, expects the market to gradually shift towards middle-income housing, as was the case in 2007 and 2008, before that trend stalled.
He believes the current focus on luxury housing is partly due to its ability to attract attention, supported by extensive media coverage, and the fact that major listed developers disclose their sales and financial results, thereby spotlighting this segment.
The real estate sector has characteristics that make it less vulnerable to global fluctuations compared to other sectors, such as industry, since both production and sales occur within the domestic market, Morsi said.
However, he noted that directing investments towards productive sectors instead, such as industry or agriculture, could be more beneficial for the economy in the long term.
In a broader context, Mahmoud Mohieldin, UN special envoy for Financing the 2030 Sustainable Development Agenda, stressed the importance of diversifying the economic base, advancing digital transformation, and reducing direct state intervention in economic activities.
He said that while the Egyptian economy benefits from strong demographic momentum and sectoral diversity, it faces challenges related to limited savings instruments, especially amid high inflation, which reinforces the demand for real estate as a store of value.
Mohieldin added in a recent television interview that the solution does not lie in restricting a successful sector such as real estate, but rather in incentivising other sectors to achieve similar levels of attractiveness for investors.
“If financial incentives are provided to one sector, why not extend similar incentives to others,” he questioned.
* A version of this article appears in print in the 30 April, 2026 edition of Al-Ahram Weekly
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