Muscat – The report titled ‘A new era for real estate dawns in Oman’ expects Oman’s residential property market to grow in tandem with the continuous growth in population.

Focusing on market trends and investments, the report states that Oman’s real estate market has picked up steam in 2022, and this momentum continued into 2023. It quotes data issued by the National Centre for Statistics and Information, which pointed out that the value of real estate transactions in Oman surged by 37.8 percent by the end of May 2023 compared to the previous year. Several advisory firms note that this robust growth, reflecting the post-COVID recovery of the sector, is driven in part by increased interest from potential tenants and investors looking to lease or purchase commercial and residential properties, it explains.

The report further notes that Oman’s commitment to boosting the real estate sector is evident in its approval of 19 new Integrated Tourism Licenses and an allocation of USD 11.37 billion for hospitality and real estate investments.

This plan is set to introduce over 16,500 hotel rooms and 42,500 housing units across the country, making room for non-Omanis to own property, thus enhancing foreign investments in the sector. It is a clear indicator of a bright future for Oman’s real estate market.

In the medium term, Oman is joining other developed countries in the importance of its real estate market. However, it is worth noting that residential development, in particular, constitutes only a relatively small portion of the overall construction spending. If it were to be scaled up to match the proportions seen in comparable jurisdictions, it could potentially double or even triple over the next decade.
Highlighting Oman’s current status in the real estate market, the report makes note of infrastructure developments that are progressing rapidly in the country. Joint heavy rail projects with the UAE and Saudi Arabia are enhancing connectivity, and Muscat is set to acquire a metro system. Port development is equally encouraging, with the three major ports of Oman experiencing an 8 percent growth in traffic in 2022.

Explaining further, the report states: “However, when we compare these achievements to real estate construction projects, it is evident that there’s room for growth. Real estate already contributes over RO 1 billion to the Omani economy, while construction adds over RO 1.5 billion. Per capita, this figure is still less than half that of the UAE,” the report explains.

“Nevertheless, signs of market maturity are becoming more evident. One notable development is the introduction of Real Estate Investment Trusts (REITs). Since their introduction in 2018, one publicly listed REIT Fund was initiated in 2020, boasting a capital of OMR 65 million. Its portfolio includes various well-known properties, from retail and industrial to office and residential, making it a diverse mix of 20 properties with a targeted annual dividend yield of 7.5 percent.

“To instill confidence in investors, Omani regulators have comprehensively regulated investment in Real Estate Investment Funds, paving the way for increased capital inflow, including from foreign investors. REITs also have enhanced transparency within the real estate sector, fostering trust among investors and attracting more capital. Less immediately obvious but equally important is the availability of targeted advice from international advisory firms for investors interested in Oman.

“So far, all real estate sub-sectors combined in Oman account for less than 20 percent of the Gross Fixed Capital Formation, according to available project documentation. In contrast, in the UAE, the same figure is twice as high. Even within this total, purely residential real estate projects remain at a relatively modest proportion in comparison to hotels and resorts, public projects, and mixed-use developments.”
Attributing the growth and development of Oman’s real estate to the transformation that the wider economy has undergone in recent years, the report makes note of steady growth in the manufacturing sector, natural gas production and agricultural output.

“When we look at the sectors that hold great promise for the future, two stand out – tourism and real estate. Oman has positioned itself as a regional tourist destination of choice, and all signs point to the continued growth of this sector,” the report highlights.