Nothing. It doesn't dissolve in water, nor does it react with water.
The anion in #"Fe"_2"O"_3# is #"O"^(2-)#, which is a very, very strong #\mathbf(sigma)# donor. On the other hand, water is a much weaker #sigma# donor (its highest-occupied molecular orbital / HOMO is much lower in energy).
What it means is that the oxide anion makes a much stronger #sigma# interaction than water would, so water is incapable of breaking the #"Fe"^(3+)-"O"^(2-)# interaction and replacing it with an #"Fe"^(3+)-""^((delta^(-))) "OH"_2# interaction. It's not favorable in typical reaction conditions.
You can see other #sigma# donors such as #"NH"_3# and #"CO"# (which is also a #pi# acceptor) in the spectrochemical series:
https://en.m.wikipedia.org/wiki/Spectrochemical_series#Spectrochemical_series_of_ligands
The ligands further to the left are not expected to capably displace the ligands further to the right (notice how #"O"^(2-)# is not the same as #"O"_2^(2-)#). A #sigma# donor with a #2-# charge is definitely a stronger lewis base than something that is neutral.
Hence, iron(III) oxide doesn't dissolve in water, nor does it react with water.
