"Extremist groups" reportedly captured Habib on Saturday which was the same day a Coptic priest was killed, according to a security official's statements to news agency AFP.
The murder caused uproar with residents of the North Sinai City. Habib was well-liked in the area and maintained good relationships with people who he met in his shop where he sold electrical appliances.
The kidnappers issued a ransom to his family that requested they pay a sum of one million EGP. It was eventually reduced to 250,000 EGP after the original amount was not paid.
This attack comes at a time when Coptic Christians in Egypt are undergoing a number of religiously motivated attacks. A Coptic priest, Father Mena Aboud Haroben, 39, was shot and killed by unknown gunmen in his far in front of Masaeed Church in Arish on Saturday.
The shooters, who are believed to be from the Brotherhood, came on a motorcycle and killed the 39-year-old priest, according to the local news site Egypt Independent.
Local resident were quoted as saying that the slain Muslim may have been killed by Islamists to create sectarian tensions.
Four Coptic Christians were also killed in the southern city of Luxor along with a number of people being injured following violence thought to be fueled by the killing of a Muslim neighbor. Gunman also attacked a church in the city of Port Said.