Egypt’s real estate market has been ignoring important warning signals, as the main players continue to pursue aggressive pricing strategies and an accelerated pattern of property development.
Among the most significant of these signals are the repeated statements made by businessman Naguib Sawiris.
Sawiris’s most striking comment was that 70 per cent of current property prices consist of accumulated interest due to extended installment plans, rather than reflecting the true value of the property.
The statements sent shockwaves among buyers whose purchasing power has fallen dramatically in recent years due to the often-unaffordable prices of real estate in Egypt.
Sawiris described property prices at present as “illogical” and driven largely by inflation, and he rejected the prevailing market practice of relying on lengthy payment schedules.
As a result, his group has adopted a strategy of rapid project execution and selling units at what he described as fair and realistic prices.
Sawiris also predicted that real estate prices could fall by as much as 20 per cent, believing that the market has reached saturation point with many buyers no longer able to afford the current prices. This, he argued, would inevitably push developers to reduce their prices in order to stimulate sales.
Another alarming indicator about the health of the market came in the recent statement made by the Madinet Masr Company (formerly Madinet Nasr) revealing an unprecedented rise in contract cancellations amounting to LE1.3 billion during the first half of 2025 compared to LE188.1 million in the same period last year, marking an almost six-fold increase. Madinet Masr is among the top 10 real estate developers listed on the Egyptian Stock Exchange. Company CEO Abdallah Salam said however that the cancelled contracts represented six per cent of total sales, a figure he argued was within the acceptable range of 10 to 12 per cent.
These statements have prompted questions about distortions in the Egyptian real estate sector and the possible overlooking of structural problems rather than addressing them decisively.
Mohamed Fouad, board member of the Egyptian British Businessmen’s Association pointed to the structural problems in the Egyptian real estate sector. Chief among them are flawed pricing mechanisms compared with more disciplined and better-governed markets, driven largely by developers rushing to launch projects without sufficient study of demand, he said.
Other issues include the absence of legislation to protect property buyers from delays, breaches, or non-compliance by developers, with the judiciary remaining the only recourse for consumers.
Additionally, there is a lack of effective oversight over the management of maintenance funds, particularly in large, high-end compounds. This mismanagement often undermines the long-term value of projects once units are delivered and occupancy rates increase, he said.
Another problem is the absence of laws and regulations governing the management and operation of large residential compounds and tourist resorts. This leaves developers and management companies free to impose their own rules, leading to recurring problems like water and electricity shortages and allowing children to drive inside gated communities, which is a form of security lapse.
Developers’ reliance on underqualified planning offices further undermines the quality and sustainability of projects, particularly those marketed heavily on green spaces and artificial lakes, which often lose their appeal over time and lead to a decrease in property prices.
For property buyers, these problems usually do not become apparent at the time of signing contracts. They begin to emerge when developers delay delivery or hand over units with specifications that differ from what was agreed.
Compounding these issues is a lack of consumer awareness. Many buyers are swayed by glitzy advertising campaigns featuring visual effects and celebrity endorsements by actors or singers. This leaves consumers confused about the distinction between promotional hype designed to boost sales and the binding terms and penalties that developers are legally required to fulfil.
The lack of clear and transparent pricing mechanisms has further fuelled uncertainty in the real estate sector. Developers are not required to disclose to clients their financing plans for project-implementation phases.
Although many property buyers are Egyptians living abroad who are familiar with the regulatory frameworks in their host countries that safeguard consumer rights vis-à-vis developers, awareness among domestic buyers in Egypt remains limited.
Strategic planning expert Sally Salah said that current prices do not reflect real market conditions. She noted that pricing at present is based on an exchange rate assumption of LE100 to the dollar, very high hedging margins, and soaring interest rates on extended installment plans.
According to Salah’s estimates, contract cancellations could reach as high as 40 per cent of total real estate sales in 2025, a grave indicator compounded by the sharp slowdown in the resale market.
Many clients, she explained, are seeking to decrease their financial commitments due to rising prices across the board. Many of them book residential units with minimal down payments and pay installments for only a few months before reselling at a higher price than the developer’s.
This group of clients, she said, has neither the financial capacity nor the genuine intention to own such properties. Their sole aim is to make a speculative profit.
Today, the real estate market is oversaturated, with an abundance of supply priced well above the purchasing power of large segments of society. Many clients who bought units beyond their means now find themselves under mounting financial strain, while developers face increasing burdens in meeting land installment payments and servicing bank loans used to finance their projects.
The recent depreciation of the dollar against the pound and the Central Bank of Egypt’s (CBE) move to cut interest rates are factors that have not yet been reflected in the real estate sector. Further declines in the dollar and interest rates could intensify the pressure, pushing the sector towards correction.
Salah argued that the way out of the bubble towards a corrective phase must begin with transparent and accountable pricing mechanisms linked to people’s incomes and purchasing power.
Other measures could include offering interest-free financing packages for buyers alongside greater transparency in government land-pricing policies, which should not be tied to the dollar or inflation.
Land costs alone now account for up to 50 per cent of project expenses in some developments. A healthy, balanced market could be achieved within five years, provided that clear restructuring policies are introduced, she said.
Mohamed Magdi, investment director at Al-Ahly Sabbour, said that the market is already undergoing a correction, but rejected the notion of a real estate bubble.
He said that the demand for housing units still exceeds supply, forcing developers to explore non-traditional payment and financing mechanisms tailored to clients’ purchasing power.
It was for this reason, he explained, that marketing strategies have shifted towards extending repayment periods, making installments more affordable regardless of the total unit price.
* A version of this article appears in print in the 23 October, 2025 edition of Al-Ahram Weekly
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