Naguib Mahfouz is the only Arab ever to win a Nobel Prize for Literature. There are many reasons to consider him the most influencing writer of Egyptian contemporary literature.
His most famous novels are Children of the Alley and Cairo Trilogy. The four novels are great but there are other gems I'd like to recommend.
Chitchat on the Nile talks about Cairo people after 1967 Arab–Israeli War which result was a defeat. It was a big disappointment to Egyptians and the socialist president Gamal Abd El-Nasser who dreamed of united Arab league. His revolutionary and radical ideology, actions, and promises made Egyptians full of hope, but the loss of the war made everything so bleak to them. The novel has 4 main characters, an actor who tries to have fun all-time and escaping from the reality, an ordinary 40-year old civil servant whose soul is dull and null, a recently divorced woman after knowing her husband cheated on her, a college girl facing a hard life. They go to a small boat on the Nile and smoke Hash trying to escape from despair. I admire how Mahfouz draws the Kafkaesque character of the civil servant.
The Harafish is also a great one, it's somehow similar to the Children of the Alley but it's not an allegorical story. I also recommend The Thief and the Dogs and Midaq Alley (turned into a Mexican movie starring Salma Hayek). And you may like Rhadopis if you're interested in Pharaohs and Ancient Egypt. Rhadopis is an ancient legend mentioned by Greek historian Strabo. Some scholars believe it is one of the earliest origins of Cinderella story, it is one of the finest classics by Mahfouz.
We can classify Mahfouz as a loyal to realism, he shapes his characters with distinctive characteristics that make us want to know them more, along with his strong story-line. Mahfouz also tends more to pick some evil persons and then put them in a trap which leads to some kind of undressing to their souls to themselves and also in presence of others, which I find it one the most important aspects of his writing, something more like Dostoevsky.