MUSCAT – Despite global economic uncertainties, the market’s performance was underpinned by strategic initiatives aligned with Oman Vision 2040, a focus on sustainability, and robust economic diversification.

According to the Hamptons International Collaborative Market Report, strategic initiatives taken by the government have played a crucial role in sustaining investor confidence and stabilising market performance. Key urban centres such as Muscat, Duqm, Sohar, and Salalah each saw varied recoveries, with Muscat benefiting most from government-backed urban development and increasing demand for high-end residential and commercial properties.

Oman’s overall economic expansion of 2.3 percent in H1 2025 was driven by growth in logistics, manufacturing, and tourism. Brent crude oil prices averaged $62 per barrel during the period, offering fiscal stability, while inflation remained moderate at 1.8 percent. The non-oil GDP contribution surpassed 35 percent, further emphasising the country’s diversification efforts.

Office Market:
In Muscat’s office sector, a tenant-favourable environment persisted, although Grade A space absorption increased by 7 percent year-on-year. Prime districts such as Al Mouj and Madinat Al Irfan remained the most sought-after locations, with average fitted rental rates of RO 12 and RO 7 per square metre per month, respectively. ESG-certified office buildings gained popularity, particularly among financial institutions and multinational companies, signalling a broader shift toward sustainable and smart office solutions.

Retail Market:
Retail market activity in Muscat stabilised, particularly in premier malls like Mall of Oman and The Avenues, which continued to attract high footfall due to strong F&B and entertainment anchors. The market has increasingly leaned into experiential retail and hybrid leasing models, including turnover-based rents, particularly for F&B and leisure operators. Looking ahead to H2 2025, demand is expected to remain strong for community-focused and experiential retail formats.

Residential Market:
In the residential segment, Muscat recorded stable demand with moderate rent increases in areas like Al Mouj and Qurum. The most active transactions were seen in mid-income apartments and villas, while smart buildings and gated communities in premium zones attracted rental premiums of 10–15 percent. Off-plan activity remained largely confined to Integrated Tourism Complexes (ITCs).

Industrial and Logistics:
The industrial and logistics sectors continued to perform strongly, especially in Sohar, Duqm, and Rusayl. Sohar Freezone led activity in food processing and light manufacturing, while Duqm drew increased interest from Indian and Chinese logistics firms. ESG-led warehousing projects are gaining investor interest, though Oman still lags behind the UAE in available green-certified industrial stock. Key emerging trends include AI-powered inventory systems, onshoring, and build-to-suit (BTS) developments for cold storage and turnkey logistics.

Hospitality and Tourism:
Muscat’s hospitality sector also showed encouraging signs, with hotel occupancy averaging 59 percent and a 10.6 percent year-on-year increase in revenue. Boutique hotels and eco-resorts, particularly in Dhofar and Al Jabal Al Akhdar, are benefiting from growing interest in sustainable travel options. The average daily rate (ADR) for 4- and 5-star hotels rose by 7 percent, with further growth anticipated during the upcoming Salalah Tourism Festival.

Looking ahead, the second half of 2025 is expected to build on the positive momentum established in H1. The market outlook remains optimistic, supported by continued infrastructure development, foreign investment, and government policy focused on economic diversification and sustainability. Demand is projected to remain strong across industrial, logistics, residential, and tourism-related sectors.

With Oman positioning itself as a logistics hub and focusing on smart city infrastructure, the property sector is expected to remain a focal point for investment. According to the report, the residential real estate market alone is projected to grow at a compound annual rate of 9.19 percent, reaching $6.6 billion by 2029, up from $4.75 billion in 2024.