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Strength in Assessment
 The
Sultanate’s real estate market has remained relatively
insulated from the global financial crisis, with the current
price trends suggesting a period of stability
Oman’s real estate market was able to sail through the
economic downturn relatively unscathed, a fact many
attribute to opening up to foreign ownership in 2005 for GCC
citizens and in 2006 for the rest of the world, and then
only in designated areas known as Integrated Tourism
Complexes (ITCs). This spared the Omani property market from
the levels of property speculation which led to market
volatility elsewhere in the region.
Like any generalisation though, this is too simplistic. The
strengths of Oman’s real estate market are many, and stem
from both proactive government oversight and the nature of
the Omani market – as well as the kind of investors it
attracts. And, there are weaknesses too, making Oman more
vulnerable in some respects than it need be to future swings
in the global financial markets.
Chief among these is the fact that there is little reliable
information available about the real estate market. This is
a problem not just in the Sultanate, but the wider region
too. In the absence of regulation and publicly reported
statistics that govern the real estate market in most
western markets, it is difficult to assess how the Omani
property market is faring today and how resilient it will be
in the future. With this in mind, OBG has talked to a wide
range of sources in the industry, from government ministers
to the top real estate firms in the country. What we’ve
learned would fill small volumes, but for OER’s readers
we’ve done our best to distill the state of the market into
a convenient who, what, where and why.
Who is investing: Oman has never been a big market for
speculators, and that’s still the case. The majority of
Oman’s properties are sold to end users or those who buy to
rent. In keeping with the Sultanate’s reputation as a
conservative, family-focused country, Oman is an ownership
society: 85.5 per cent of citizens own their house,
according to the Ministry of National Economy. As previously
mentioned, foreigners have only been able to buy property in
ITCs. The most well-known of these is The Wave, located near
Seeb International Airport, which will account for 50 per
cent of the freehold product available in the
Muscat area through
2013.
What is available: Pretty much everything. A variety of
projects commissioned in 2006-2007 are reaching completion,
meaning there are villas, apartments, retail and office
space on the market. Due to falling prices for a number of
construction materials in 2009-2010, the most recent
projects are often able to undercut the prices of products
which came to the market in 2008-2009. Two to three bedroom
apartments are the most in demand, according to a number of
realtors.
The biggest gap in the market at the moment is affordable
housing – a problem often faced by countries with
fast-growing populations and a GCC-wide trend. In Muscat in
particular, development has produced a number of high-end
properties and fewer large housing projects. One reason
housing has remained focused on the higher-end is the height
cap on buildings, which has historically stood at five
floors. Recently, the government designated a number of
areas in the capital where apartment and office complexes of
up to twelve stories will be permitted, a move which should
lead to a better supply of affordable housing.
Where to invest: New developments in up and coming
neighbourhoods. This counts in both Muscat and the wider
country in general. In the capital, the prime neighbourhoods
of Qurum and Madinat as Sultan Qaboos are fully developed
and demand some of the highest rents in the country. Yet,
Muscat is a dynamic city, and developments in the west in
particular show tremendous promise. Seeb, which lies west of
the airport, currently houses Sultan Qaboos University, the
premier university in the country, and a handful of
developments, and the area looks set to take off. In 2009,
52.5 per cent of all building permits issued by the Muscat
Municipality were for plots in this area, with the remaining
47.5 per cent distributed throughout the other five
districts in the capital.
Because Oman does not restrict office space to certain zones
– people are allowed to work and run businesses from their
homes, if they wish – a lack of office space has not been as
much of an issue in Oman as it has been in other parts of
the Gulf. However, a number of companies have moved, or plan
to move, to purpose-built office buildings in Airport
Heights, which is projected to become the next business
district, housing a number of ministries and major
companies. Then, of course, there is the rest of the
country. The government has proven itself keen to invest in
alternate population centres to avoid overcentralisation in
Muscat. Improved infrastructure links, from the development
of four new airports at Sohar, Duqm, Ras al Hadd, and Adam
to the upcoming country-spanning railway, will cut transit
time throughout the GCC’s second largest country, making
far-flung cities like Salalah and Ras al Hadd all the more
attractive.
One area particularly worth monitoring is Duqm. The site,
which is at the early stages of development, is envisioned
as the next great industrial hub for Oman and perhaps the
Gulf region. At 1234 km2, Duqm will be the largest Special
Economic Zone (SEZ) in the Middle East, with a focus on
industry, logistics, and tourism aimed at generating
employment. Depending on how the project progresses, the
area could become a magnet for developers keen to diversify
away from more established cities.
Why Oman: Anyone reading this magazine probably does not
need to be convinced that Oman is a desirable place to live.
Muscat is popularly said to be the second cleanest capital
city in the world (after Singapore), and in the running for
the most livable. Traffic is minimal throughout the country
and an emphasis on sound urban planning has kept development
in check. But of course most residents will tell you that
Oman’s greatest richness lies not in its cities, but the
wealth of natural beauty outside them. The Omani people,
too, are justly famous for their warmth towards strangers.
With the four new airports currently under development,
exploration of the country’s interior will soon be easier
than ever.There are, of course, limitations. Oman does not
have a detailed legal framework to deal with property
disputes yet. Valuing property is difficult because of a
lack of standard valuation procedures. These are problems
common throughout the GCC and Oman would do well to become
one of the first countries to move on this front.
Several industry insiders told OBG that while the timeline
for projects tends to be longer in Oman as compared to other
countries in the Gulf, there is much less risk involved. The
government and private sector have proven themselves
genuinely committed to bringing projects through to
completion. Developments are often ambitious, but also
realistic. Given this track record, the real estate sector’s
conservative but steady growth looks set to weather future
storms with the same fundamentals that saw it through
2008-2009.
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