Egypt’s construction boom: legal risks and opportunities

According to a recent report “Egypt’s metamorphosis into a regional real estate development powerhouse is well and truly underway”, driven by $1.4 billion in private capital from the UAE and Saudi Arabia.

Megaprojects like the $58bn new administrative capital, Ras El Hekma, the Marassi Red Sea Project and the new Alamein City are drawing intense interest. This signals a new era of opportunity for contractors in infrastructure, residential and commercial developments but also presents legal challenges.

For international contractors, this means increased demand for project delivery, compliance with evolving regulations, and strategic partnerships with Gulf-backed developers.

The market is projected to grow from $50.9bn this year to $68.7bn by 2030, driven by Egypt’s national modernisation programme under its Vision 2030 initiative. Despite currency volatility, increased localisation in supply chains and the adoption of modern methods of construction (MMC) are expected to sustain a forecasted 10.1% growth rate over the next few years.

Growth and market reform

This expansion is underpinned by a compound annual growth rate (CAGR) of 7.8%.

Egypt is also accelerating its transition to green energy, with major initiatives including a nuclear power plant at Dabba and the Suez wind farm.

The sector has seen a surge in new construction companies, with nearly 3,000 firms established in 2024 – up a fifth on the previous year. This growth has driven increased localisation in the supply chain, opening the door for new partnerships.

While residential development accounted for a full third of Egypt’s construction market last year, other sectors are expanding. Transport infrastructure is predicted to reach 9.2% of projects by the end of the decade. New builds dominate the market, comprising 91% of activity in 2024.

Almost half of that work took place in the Greater Cairo region – with 47% of construction projects cited there, a figure expected to grow by up to 8.7% by 2030.

Public funding represents 70% of the construction market investment, although private capital continues to rise and is predicted to reach 9.2% CAGR by 2030.

Legal compliance and strategic opportunities

The abolition of Egypt’s 5% schedule tax and its integration into the standard 14% VAT regime in June 2025 aligns the country’s tax system with global standards. This reform improves contractor cash flow and facilitates international financing.

But the changes also come at a time when building regulations have been tightened, and violators face heavier penalties under new planning measures aimed at modernising planning and development in urban areas. Understanding these changes is critical for maintaining project timelines and avoiding legal disputes. This month also sees new laws brought in to mandate annual salary increases, allow for more opportunities for remote working and to streamline Egypt’s dispute resolution processes.

Taking effect from 1 October, the new legislation entitles workers to an annual 3% increase, and requires employers to pay 0.25% of the minimum social insured salary per employee to a training fund. It also introduces paternity leave for the first time and increases the maternity leave period to four months rather than three.

Recent arbitration cases involving infrastructure projects in the country, such as the Damietta Port ruling, have also highlighted the risks associated with international joint ventures, underscoring the need for robust contract management and resolution processes.

Egypt’s Court of Cassation set aside a $490 million ICC award after a long-running battle over the port administration, raising concerns over arbitrability of state contracts. 

The dispute arose from the termination of a concession contract to build a container terminal at Damietta Port. Although a 2021 decision, the ruling could have broad implications for disputes involving state concession contracts in Egypt.

Egypt-based contractors therefore need to make sure they are aware of arbitration procedures, and structure their joint ventures to manage potential risk exposure – with International Federation of Consulting Engineers (FIDIC) based contracts tailored to local legal requirements recommended

Strategic considerations

While Egypt’s growing construction industry presents significant opportunities, it also introduces complex risks which could impact on long-term success. To navigate this evolving landscape, foreign contractors should consider partnering with local companies to meet registration and compliance requirements. For example, adopting FIDIC-based contracts tailored to Egyptian law is essential. These contracts should include robust dispute resolution clauses to mitigate legal exposure.

Staying informed of changes to labour and procurement laws in Egypt is critical. With 70% of the market publicly funded, understanding government priorities and compliance standards will be key to securing and sustaining major projects.

Co-written by Scheherazade Dubash of Pinsent Masons.