The UAE-based Arabtec Holding is set to sign an agreement with Egypt’s Defence Ministry for the development and construction of up to one million low-cost housing units at 13 locations across the North African state.

A memorandum of understanding (MoU) for the deal, which is estimated to be worth up to E£280bn ($40bn), is expected to be signed on 9 March, with a final contract anticipated to be signed in the second quarter of this year.

Arabtec Holding’s real estate company will develop and sell the homes, while its contracting arms will execute the construction. The Defence Ministry will provide the land. Half of the sites will be either in or near to Cairo.

When Arabtec announced the launch of a new subsidiary to develop real estate projects in the Middle East in December last year, the company said it would focus on delivering affordable housing across the region, with a particular emphasis on major markets such as Egypt.

Egypt has the biggest shortage of affordable accommodation in the region, with an estimated shortfall of about 1.5 million homes. The issue was a key driver of the 2011 revolution, and continued economic and political instability has made the situation worse.

After the revolution, construction work was largely put on hold as developers negotiated land contracts with the new government. In May, the Housing Ministry launched a plan to build 175,000 homes in 25 cities over the coming fiscal year, as part of a programme to construct 1 million new housing units in densely populated areas.

Since then, various government agencies have tendered housing contracts. In late February, the Red Sea Governorate housing directorate in Hurghada issued seven tenders for the construction of 1,000 housing units in the municipality of Ras Ghareb. In December last year, Egypt’s Housing Cooperative for Employees at Hotels & Tourist Villages in Hurghada issued a tender for the construction of a residential compound in the Al-Ahyaa district in Hurghada.

Earlier in December, Egypt’s General Authority for New Urban Societies issued five tenders for the construction of 51 residential buildings as part of a social housing scheme in New Minya City. A total of 1,224 housing units will be built in the city as part of the development.

In late October, Egypt’s Housing Cooperative Society for Employees at the Customs Authority tendered the construction of 14 residential buildings under the first phase of a project in the eighth district of New Borg el-Arab city.

In September, the Housing Cooperative Society for the staff of Cairo University issued a tender for a residential scheme at the northern extension of 6 October Citycomprising 28 residential buildings.

For Arabtec, the deal will further boost its backlog, which before this deal was sitting at about AED60bn ($16bn), making it the largest contractor in the UAE and one of the largest in the region.

In early February, the firm signed an agreement for the largest construction deal in the UAE. The AED22bn deal involves the design and construction of 37 towers across Dubai and Abu Dhabi for Abu Dhabi-based Aabar Investments. In early January, Arabtec won a AED2.6bn contract to build a mixed-use development on Abu Dhabi’s Reem Island, and in mid-January, it secured a AED5.7bn deal to build Jordan’s first themed tourist destination, the Red Sea Astrarium.