The eastern Mediterranean basin is witnessing increased storm activity impacting populous urban coastal areas that historically were not prone to catastrophic flooding. In the fall of 2023, Storm Daniel struck the eastern coast of Libya, causing unprecedented flash floods with a tragic death toll and large-scale infrastructure damages. We use Sentinel-1A C-band SAR images to characterize the resulting flash flood erosion and sediment load dynamics across the watersheds and to map damages within coastal cities at their outlets. Our results suggest that sediment loading, resulting from surface erosion, increased the density of turbid streams. The above exacerbated the catastrophic impact of the flash floods in the coastal cities of Derna and Susah, where 66% and 48% of their respective urban surface have experienced moderate-to-high damages. Our findings highlight the increased vulnerability of coastal watersheds in arid areas within the eastern Mediterranean basin due to the forecasted increase in hydroclimatic extremes and call for a transformative coastal management approach to urgently implement nature-based solutions and land-use changes to mitigate these rising risks.