Shares in the Dubai-listed builder Arabtec have plummeted following news that a $40 billion housing deal in Egypt has stalled.

Arabtec shares fell by 2.94% on Monday, following a 3.16% decline the previous day.

A Cairo-based newspaper on Sunday reported that Arabtec had not met state conditions to build the massive housing project announced a year ago.

Last March, Dubai’s largest listed construction firm agreed with the Egyptian army to build housing in Egypt worth more than $40 billion.

Economic ties between Egypt and the UAE have strengthened since the ousting of president Mohammed Morsi in 2013.

Both Dubai’s Emaar and the Abu Dhabi-based Eagle Hills have been linked to a massive project to build a new capital city outside Cairo at a cost of up to $80 billion.