As Egypt moves to strengthen regulation of its real estate sector through the implementation of the Real Estate Brokerage Law, attention is increasingly shifting to another longstanding gap in the market: the absence of mandatory escrow accounts to safeguard homebuyers’ payments.
The debate has gained momentum after Ahmed Fayed, a member of parliament, submitted a proposal urging the government to require escrow accounts for all off plan real estate projects.
The proposal argues that while Egypt has introduced regulations for brokers and marketers, the financial protection of buyers remains largely dependent on developers’ own practices.
It comes at a time when Egypt’s property market has witnessed a growing number of delayed deliveries, project restructurings, and disputes between developers and buyers.
Although most developers continue to meet their commitments, several projects have faced delays in recent years as construction costs surged and financing conditions tightened, prompting calls for stronger mechanisms to protect buyers’ funds without undermining the sector’s growth.
Fayed said the real estate sector has become one of Egypt’s largest economic sectors and the primary destination for household savings. Yet, unlike bank deposits, which are protected under the supervision of the Central Bank of Egypt, payments made by homebuyers toward residential units often lack an equivalent safeguard if a project is delayed or a developer encounters financial difficulties.
Under the proposal, developers selling units before completion would be required to open a dedicated escrow account for each project. All buyer installments would be deposited into that account, with funds released only in line with certified construction progress approved by independent engineering consultants.
The proposal also calls for the Central Bank of Egypt to issue supervisory regulations governing banks that manage escrow accounts, while creating a unified digital database linking the Ministry of Housing, the Central Bank, commercial banks, and the New Urban Communities Authority to monitor projects operating under the system.
Fayed noted that the objective is not to impose additional burdens on developers but to establish a balanced regulatory framework that protects both buyers and developers while improving transparency across the market.
He pointed to international models, particularly the United Arab Emirates, where escrow accounts are mandatory for most real estate developments and withdrawals are linked to construction milestones under government supervision. Similar mechanisms are also used in Singapore and several U.S. states to protect buyers’ funds during the construction phase.
Experts Back Stronger Safeguards
Economic analyst Hany Tawfik argued that introducing mandatory escrow accounts has become essential for restoring confidence in Egypt’s real estate market.
He said each development project should have a separate bank account into which customer installments are deposited, with withdrawals permitted only after certified engineering reports confirm construction progress.
Without such controls, Tawfik warned, some developers may use customer payments as collateral for financing or redirect project cash flows to meet obligations elsewhere rather than funding construction, increasing financial risks for buyers.
He also advised homebuyers to link installment payments contractually to construction milestones and to deal only with developers that have proven financial strength and an established delivery record.
Meanwhile, real estate development consultant Abdelrahman Khalil said escrow accounts should not be viewed solely as a consumer protection tool.
According to Khalil, the mechanism also protects developers by preventing excessive expansion financed through customer installments from ongoing projects. He said restricting the use of project funds reduces the risk of companies overextending themselves through additional land acquisitions or new launches before completing existing developments.
Khalil added that wider adoption of escrow accounts could strengthen governance across the real estate sector, improve market discipline, and enhance investor confidence, particularly as Egypt continues its large scale urban expansion and the value of residential investments continues to rise.
Although experts broadly support expanding the use of escrow accounts, they cautioned that mandatory implementation should be accompanied by transitional measures for ongoing projects. Without such arrangements, smaller and medium sized developers could face liquidity pressures that may affect project execution, underscoring the need for a gradual implementation framework that balances financial discipline with market stability.
