The up and coming real estate sector of Oman is impossible to ignore. Supported by various positive ingredients, the burgeoning economy of the sultanate faces a bright future in major sectors, and real estate is at the top of the list. The rather liberal Omani government plays a positively emphatic role in opening up the state’s economy through its rigorous modernization, diversification, and liberalization plans.
Coined Oman 2020, the government has devised a reform plan to diversify its economy to make it less dependent on oil production. In order to attract foreign investment, the government passed a law in 2006 allowing foreigners to purchase freehold property throughout tourism-designated resorts across Oman — illustrating its candid attempts towards heterogeneity. Projects such as The Wave, Blue City (Al-Madina al-Zarqa), and Salam Yiti are headlining real estate news in the sultanate, as foreigners are flocking in just to purchase residential properties at comparatively — relative to its GCC neighbors — low prices. The Omani government is also helping locals purchase homes by imposing caps on banks for personal loans (including home loans), at 40% to 45%. Since the demand of available space has outstripped supply, Oman is facing an increase in rental and purchasing prices. According to the Oxford Business Group (OBG), there has been a “shortage of about 2,500 residential units in Muscat annually, and as a result unit prices in Muscat have doubled over the past three to four years, increasing from around $195-250 per [square meter] in 2004 to $390-520 in 2007.” To contain this problem, the Omani state has been notably generous in the distribution of land to mammoth developers, at especially low rental rates for long-term leases. Clearly the government is creating tremendous incentives for both foreigners and locals alike to acquire real estate in Oman.
Analysts predict that the value of demand for Omani real estate will top $20.8 billion by 2010. Eqarat.com market research reveals that total investments into the real estate sector have reached $4.2 billion in 2007, up from a low $750,000 in 2005. Currently, residential properties are the highest fruit-bearing investments within the sultanate. In 2007, the average price per square meter grew by 253%, rising to an average of $135 per square meter — a dramatic increase from a mere $42.35 in 2006. Many foresee Oman’s long-term investments into commercial activities, such as manufacturing and tourism, as major drivers on the demand for real estate this year. Other key forces to the proliferation of the real estate sector include: significant population growth, with quite a young demographic — approximately one third of Omani’s population is under the age of 15 — influx of expatriates, stream of international companies, incentives for foreign investors, low cost of land, as well as the luminous growth potential of the sultanate’s economy. With such promising drivers on its side, financial backing from regional heavyweights is sure to increase sooner than later.
So long as the Omani government aspires to diversify its economy and lessen its dependency on high oil prices, the potential of its real estate market will continue to shine brightly. Without a doubt, the Omani real estate sector is bound for exponential growth and great success.
