Arabtec Holding’s role in the 1 Million Home project in Egypt has been scaled down, according to a spokesperson from Egypt’s Housing, Utilities & Urban Communities Ministry.

The spokesperson told MEED that the UAE’s Arabtec will now develop only the 100,000 units that make up phase one of the major housing scheme, not the originally planned 1 million homes across the total development.

The spokesperson said Arabtec will be involved in the first phase of the project, as the ministry looks to attract interest from other local and international investors to develop the rest of the scheme and the remaining 900,000 units.

In March, MEED reported that there had been a disagreement between Egypt and Arabtec over financing, with the country’s military requesting Arabtec to finance the project through foreign investments rather than funds raised via local banks.

Several sources close to the project have told MEED that while the deal is likely to go ahead, Arabtec will be expected to compromise. It is anticipated the UAE firm will accept the renewed conditions put forward by Egypt.

On 25 May, MEED reported that a breakdown in the relationship was caused by Egypt looking to renegotiate some of the terms of the deal.

It is also understood the military and Housing Ministry may want Arabtec to use only local materials for the entire project, as well as use an external auditor to monitor compliance with a new profit cap.

Arabtec and Egypt have been negotiating the terms of the project since 2014, when the initial memorandum of understanding (MoU) was signed. The housing scheme would have seen Arabtec subsidiaries developing and constructing 1 million housing units in 13 locations across the country.

The overall development value is expected to be £E280bn ($40bn).

Arabtec was not available for comment.