Israel-Iran escalation may affect Egypt's property prices: Developers

Daily News Egypt

22-06-2025

Real estate developers and experts agree that the escalating regional conflict between Iran and Israel places Egypt's property market in a complex position.
On one hand, demand for real estate may rise, as it is seen as a safe haven asset. On the other, the sector faces the looming threat of rising construction costs driven by disruptions in energy prices and supply chains.
Shift in Developer Priorities
Developers stressed the need for a strategic shift in how companies operate—moving away from a 'sales race' and toward ensuring execution capabilities. They emphasized that success is no longer measured by record-breaking sales, but by delivering projects on time and with the agreed-upon quality.
While expressing cautious optimism about the market's relative stability—provided the conflict remains short-lived—they warned that any major escalation could force them to reassess pricing strategies and launch plans.
Regional Conflict's Ripple Effect
Tarek Shoukry, Chairperson of the Real Estate Development Chamber at the Federation of Egyptian Industries, stated that the intensifying conflict between Israel and Iran would inevitably have regional economic repercussions that would affect Egypt's property market.
Shoukry noted that construction material prices are currently the most significant factor influencing real estate project costs. These may be impacted by the ongoing war—particularly due to the threat of closing the Strait of Hormuz and its potential economic consequences for countries across the region and the world.
Cautious Sales and Financial Planning
According to Shoukry, the market turbulence calls for a cautious sales strategy—selling a limited number of units in parallel with project execution to avoid the risks of sudden cost increases, which could lead to delays or execution challenges.
He stressed the importance of thorough financial planning to absorb unexpected cost changes and advised against heavy expansion in long-term installment sales, warning that 'this equation could backfire' if costs continue to rise faster than anticipated.
Property as a Safe Haven
Regarding sales performance, Shoukry noted that demand for real estate typically rises during crises and wars, as property is viewed as a safe haven for preserving wealth—not only in Egypt, but also across neighboring markets, which may turn to Egyptian real estate due to its relative stability amid the conflict.
Government Response
The negative repercussions of the war prompted Egyptian Prime Minister Mostafa Madbouly to form a crisis committee under his leadership to prepare for developments across various sectors. Madbouly is set to meet regularly with committee members and advisory groups to assess the impact of recent events on key sectors, according to an official statement.
The Israel–Iran conflict has already affected the Egyptian economy, including stock market losses, a slight depreciation of the Egyptian pound against the US dollar, and additional pressure on the state budget due to rising global oil prices.
Conflicting Trends in Real Estate
Ahmed Shalaby, member of the Ministerial Committee for Urban Development and CEO and Managing Director of Tatweer Misr, stated that while it is too early to fully assess the crisis's impact, two opposing trends are already emerging.
On the positive side, demand for real estate is rising beyond expectations, as property remains a traditional safe haven during crises. On the negative side, costs are increasing due to potential energy price hikes and supply chain disruptions, which could cause shortages in construction materials. This is expected to place additional burdens on developers delivering projects based on pre-crisis pricing. In both cases, a rise in property prices seems inevitable.
Challenges in Project Execution
Shalaby added that while increased demand and rising prices may appear positive, they come with significant challenges in execution. The greatest risk, he explained, lies in cost differentials that developers must absorb.
'It's true that we all implement hedging strategies, but there's no way to guarantee where things are heading,' he said, especially with the possibility of escalating tensions and a potential closure of the Strait of Hormuz, which could drive oil prices to record highs and significantly pressure inflation.
Still, he emphasized that companies have gained experience in navigating recent crises, and that Egypt's real estate market has maintained much of its growth potential, supported by political and economic stability, as well as strong local and international demand.
Real Estate Resilience and Cautious Optimism
Ayman Amer, General Manager of SODIC, noted that companies have developed solid hedging strategies against sudden cost fluctuations, giving them more flexibility to absorb shocks—provided they don't persist for too long.
He emphasized that the availability of construction materials remains critical and may be affected in 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.
Execution Over Expansion
Sherif Mostafa, CEO of IGI Developments, said that adopting cautious sales strategies and focusing on executing existing projects is the best approach for developers at this stage. He emphasized that companies have already achieved record-breaking sales over the past two years, and that 2025 and 2026 should be focused on construction and delivery.
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 liquidity and healthy cash flow, rather than chasing high sales numbers.
Strategic Restraint and Currency Risks
He noted that lower sales this quarter compared to last year should not be viewed negatively; rather, it may reflect a deeper understanding of the current phase.
Mostafa also mentioned that most companies are factoring in an adequate level of hedging when pricing and estimating costs. However, he warned that if the dollar exchange rate reaches EGP 55, it would pose serious concerns and force companies to reassess their plans—a scenario that has not yet occurred.
He also cautioned that a surge in global fuel prices or worsening supply chain disruptions could trigger a new wave of inflation and delay any expected interest rate cuts.
Impact on Materials and Supply Chains
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 added that geopolitical tensions have triggered sharp volatility in global oil prices, increasing shipping costs and the prices of imported construction materials.
Egyptian developers are already feeling the pressure, reporting notable increases in steel and cement costs—factors that could disrupt project timelines, squeeze profit margins, and prompt shifts in pricing strategies.
Navigating Uncertainty
'The current phase demands caution,' said Diaa. 'We're likely to see developers revisiting delivery schedules, reprioritizing projects, and focusing on cash flow stability over aggressive sales targets.'
He further noted that the situation is compounded by a slowdown in Suez Canal revenues and disruptions to regional trade, placing additional strain on Egypt's foreign currency reserves and heightening inflationary risks—key concerns for a sector heavily reliant on imports.
Despite these headwinds, Egypt's property market continues to show resilience. Developers and investors are urged to remain agile—adjusting capital expenditure plans, implementing conservative sales strategies, and preparing for what could be a challenging third quarter.
Push for Local Alternatives
Hesham Ibrahim, Managing Director of Winvestor Developments, stated that escalating tensions—especially the threat of closing the Strait of Hormuz—are already impacting Egypt's building materials market.
He noted that cement prices have risen by around 15% over the past two months due to supply disruptions, while steel prices, after dropping 20% earlier this year, have rebounded by nearly 18% amid rising shipping and insurance costs.
Ibrahim added that some imported materials are becoming scarce, increasing reliance risks. Many developers are now stockpiling essential materials in anticipation of deeper supply chain disruptions.
He stressed the need to reassess imported construction inputs and prioritize locally made alternatives—such as aluminum and cladding—as a sustainable strategy to reduce risk and maintain market stability.
He concluded that the shift toward local products is now a strategic necessity, urging developers to adapt to fast-changing geopolitical dynamics to ensure project continuity and cost control.