MUSCAT : In an exclusive interview with The Arabian Stories, O’Connell, a Chartered Surveyor with over 25 years of international experience, attributed this trend to limited new supply, improved infrastructure, and sustained demand from both expatriate tenants and high-income Omanis seeking quality living environments.

Oman’s Real Estate Market in H1 2025

Commenting on the overall performance of Oman’s real estate market during the first half of 2025, O’Connell noted a resilient and stable performance. “Residential demand held steady, especially in Muscat in the prime locations and ITC communities. Select submarkets saw healthy rental growth driven by infrastructure upgrades and population inflows,” he stated.

The commercial real estate sector, particularly Grade A office market, also gained momentum, he noted, driven by increased occupier demand for well-designed, good quality versatile office spaces with ample parking. Explaining further, he said, “Retail also showed signs of recalibration, adapting to evolving consumer preferences and more experiential leasing formats such as base rents and turnover in F&B. In some cases, we are seeing CPI (Consumer Price Index) rental growth formulas included in leases, which has been encouraging. Community and strip malls are becoming more popular.

“Overall, the market’s performance underscores a sustained recovery trajectory amid global headwinds,” he added.

Steady Performance Despite Global Uncertainties

When asked to elaborate on the implications of ‘steady performance’ for rent prices, despite global uncertainties, O’Connell explained that it signifies a market where rents have generally remained firm with limited volatility or movement. “In most key submarkets, rental prices have either remained stable or experienced marginal increases, particularly in prime locations. This reflects a healthy balance between supply and demand, with no significant oversupply or speculative pressure that could distort pricing,” he stated.

Shifting Preferences

Beyond the prime areas, O’Connell noted a broader shift in location preferences among both locals and expatriates within Muscat, with a noticeable trend toward newer, master-planned communities like Al Mouj, Muscat Hills, and parts of Madinat Al Irfan, which offer integrated amenities, security, and lifestyle advantages. “Younger Omanis and expatriate families are also showing interest in peripheral locations that offer better affordability and road connectivity, such as Al Amerat and Seeb,” he added.

According to him, high profile projects such as Sultan Haitham City are expected to further reshape Oman’s urban landscape, signalling a shift towards long-term, structured urban growth with integrated residential, commercial, and public spaces. “These projects enhance investor sentiment and will likely act as magnets for both population growth and inward investment over the next decade,” he observed.

Infrastructure Investments

Infrastructure investments, particularly in road networks, utilities, and logistics corridors, have played a pivotal role in not just underpinning market stability, but also in increasing market value and demand. Underscoring the same, he stated: “Areas benefiting from recent upgrades have seen improved real estate sentiment and gradual rental appreciation such as the Muscat Highway and Batinah Expressway. These investments not only support current market needs but also enable future urban expansion and we see this happening in Al Khoud, Barka and Seeb.”

Corporate Location Choices in Muscat

With Grade A office space absorption up by 7 percent, there is a growing demand for modern and sustainable workplaces. O’Connell pointed out that corporate location choices are increasingly influenced by ESG compliance, modern amenities, crucial parking facilities, and digital infrastructure. “Proximity to decision-making centres (like ministries or financial hubs) and access to a skilled workforce remain critical. Newer office hubs in Airport Heights and Madinat Al Irfan are gaining traction due to their accessibility to road networks, great location and quality offerings,” he added.

Opportunities for Local and International Developers

With Oman’s residential market projected to reach $6.6 billion by 2029, O’Connell sees significant long-term opportunities for local and international developers, provided they deliver sustainable, affordable, and community-focused developments that align with Oman Vision 2040. “I would say this is the number 1. Developers can tap into emerging demand from young Omanis, mid-income professionals, and retirees. There’s also increasing room for mixed-use and lifestyle-oriented projects in second-tier cities, tourist hubs, and along the Batinah coast, backed by government incentives and a maturing regulatory environment,” O’Connell concluded.

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