Oman: Developers seek solutions to real estate challenges
MUSCAT: The real estate market in the Sultanate of Oman has witnessed notable activity in recent years, particularly with the launch of Smart City projects such as Sultan Haitham City, and integrated residential neighbourhoods under the 'Sorouh' initiative, all of which aim to provide a comprehensive urban environment aligned with the goals of Oman Vision 2040.
However, this momentum faces several obstacles that threaten the pace of growth and investment in this vital sector chief among them being weak purchasing power among citizens, high construction costs, and land development challenges.
In this context, the Observer spoke with several prominent real estate developers during the 20th Oman Real Estate Conference and Design and Build Week, where they outlined the major issues confronting the sector and proposed realistic solutions to enhance market efficiency.
FINANCING: THE MAIN BOTTLENECK
Nasser Al Badi, General Manager of Al Badi Investment Group, emphasized that the concept of integrated residential neighborhoods, introduced by the Ministry of Housing and Urban Planning about four years ago, marked a qualitative leap in the housing sector, with the pilot project 'Hayy Al Naseem' initially showing strong sales. However, he noted that it soon faced marketing difficulties due to citizens' limited access to financing.
'It's unrealistic to expect citizens to purchase homes costing between RO 25,000 and 50,000 when their monthly income barely covers basic needs. Banks lend to those earning RO 325 a month, then deduct OMR 150 in repayments—how can someone live on the remaining amount?' Al Badi lamented.
He clarified that the problem isn't with the integrated neighborhood concept itself, but with the absence of financing mechanisms that align with citizens' incomes. He proposed long-term loans extending up to 50 years, with monthly deductions capped at 20–25% of income to ensure a dignified standard of living without overwhelming debt.
Qais al Bahri, CEO of Dream Villa, described housing finance as the 'fundamental dilemma,' stating that the challenge isn't legal but financial—where loan ceilings are not in line with citizen incomes or current property prices. He suggested that collaboration with banks, as seen in Saudi Arabia, could create holistic financing solutions.
RISING CONSTRUCTION COSTS
The rising prices of construction materials, along with permitting and approval fees, have created additional pressure on both developers and buyers.
Al Badi explained: 'To start a project, we have to pay thousands—RO 7,000 for mining approvals, RO 3,000 for environmental permits, and RO 18,000 for civil defense clearance. These fees ultimately inflate property prices.'
Al Bahri attributed the increase to global factors beyond local control, stressing that reducing construction quality to cut costs is not an acceptable solution.
MORE REGULATORY REFORMS NEEDED
Both developers acknowledged notable progress in real estate laws over recent years.
According to Al Bahri, the Ministry of Housing has become more flexible, offering easier eligibility for housing ownership. For instance, citizens can now purchase property even outside their native governorates, and support can reach up to RO 30,000 or even RO 50,000.
Al Badi praised the Ministry's escrow account system, which he described as an important regulatory measure that helps prevent real estate fraud.
ABUNDANT LAND BUT LIMITED INFRASTRUCTURE
Commenting on claims of land scarcity in some governorates, Al Badi denied there is a shortage of land, stating: 'We have thousands of unused plots, but the real issue lies in the lack of infrastructure—areas without water, sewage, or electricity.'
Al Bahri agreed, noting that 'owning land is not enough. The land must be livable with access to essential services, and this is what the Ministry has been focusing on recently.'
Al Badi proposed a different approach to stimulate the real estate market, one that goes beyond direct subsidies. He suggested allowing expatriates and their families to reside and own property.
'The demand for housing is low because the population isn't large enough to drive the market. If we allowed expatriate families to settle and rent homes, thousands of apartments would be occupied, and local markets would flourish, similar to what we've seen in Dubai and Riyadh,' he explained.
Oman's real estate sector currently struggles with a disconnect between strong government planning and the citizen's financial ability to keep up. While regulations have become more flexible, financial constraints remain the core issue—requiring joint intervention by the government and the banking sector to ensure the continuity of development projects and restore market balance between supply and demand.
In light of these challenges, proposed solutions such as expanding banking options, reducing government fees, and increasing population density through inclusive residency policies may offer new opportunities for this vital sector in shaping Oman's urban and economic future.
2022 © All right reserved for Oman Establishment for Press, Publication and Advertising (OEPPA) Provided by SyndiGate Media Inc. (Syndigate.info).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Khaleej Times
17 hours ago
- Khaleej Times
UAE: How to own a stake in property for as little as Dh500
Buying property in some parts of the UAE has become out of reach for many people, but there are solutions. One option is to buy a portion of the space instead of the whole thing. This is known as fractional ownership and thanks to technology, it has become cheaper and more transparent. Companies like Stake and SmartCrowd offer investors the chance to buy small stakes in properties from around Dh500. For example, Stake currently has six properties available to invest in, including a one-bedroom apartment in Downtown Dubai, with a projected net yield/income of 5.1 per cent. Recently, we saw the launch of a new type of fractional property ownership called real estate tokenisation. When you buy a portion of a property, it's recorded on the blockchain, and you get a digital token to prove ownership. The platform is called Prypco Mint and it's a collaboration between property company Prypco and the Dubai Land Department (DLD). Matt Blom, co-founder at Tokinvest, said: 'Fractional ownership opens the doors of real estate investing to a broader, more diverse pool of investors. Traditionally, property investment required significant capital and often came with geographic or legal barriers. But with fractional models, especially those powered by blockchain and tokenisation, investors can access high-quality, income-generating assets at a fraction of the cost.' Prypco Mint's first listed property — a two-bedroom apartment in Damac Prive Tower in Dubai's Business Bay — was fully funded within a day. It attracted more than 200 investors from over 40 nationalities, with an average investment of Dh10,714. Following the platform's strong debut, multiple developers have shown interest in listing their properties. The platform currently has a waiting list of more than 6,000. How it works Through the Prypco Mint platform, investors can buy small shares, or fractions, of premium Dubai properties, with a minimum investment of Dh2,000. These shares, which are in the form of digital tokens, can earn returns through both rental income and rising property values. At the moment, the scheme is only open to UAE residents with an Emirates ID, but there are plans to open it up to international investors in the future. All transactions are done in UAE dirhams and no cryptocurrency is involved during this trial phase. Investors will get full access to detailed information about the properties, including pricing, risks, and minimum investment amounts. Toby Young, a Dubai-based digital assets strategist, said: 'The scheme is aimed at anyone and everyone assuming they meet the minimum investment criteria. The idea behind fractionalising real estate is to democratise ownership and make assets available to everyone, not just the select few.' Raising the Stakes The DLD/Prypco pilot scheme is along the same lines as that of Stake, a private company that was set up in 2021 and which has been at the forefront of fractional property ownership. It allows people to invest as little as Dh500 to own a fraction of a property. It has already funded more than 400 properties worth more than Dh1 billion in transactions. Rami Tabbara, co-founder and co-CEO at Stake, said that fractional ownership can often be a difficult concept to explain to people. 'It's a new concept for many. People naturally associate real estate with full ownership, large sums of money, and mountains of paperwork. But when we explain it as buying shares in a property, just like you'd buy shares in a company, it starts to make sense.' On Stake's app, there are only six properties currently available to invest in. Why such a low number? 'We prioritise quality over quantity. Every property goes through a strict underwriting process, and only the best listings and the best yielding opportunities make it to Stake,' Tabbara explained. Returns Stake's yearly investment returns average around 10 per cent, but this drops to a projected net yield (after costs have been taken into account) of around 5 per cent a year. Stake said it has been in active discussions with both the DLD and Dubai's digital assets regulator VARA to align its platform with the new regulatory framework around tokenised real estate. Tabbara expects his company to participate in the second phase of the pilot programme, which is scheduled to go live in the second half of this year. DLD said $16 billion (Dh58.7 billion) worth of real estate could be digitised by 2033. What about the DLD/Prypco pilot project's returns? The first property offered was sold at a discount to attract buyers, which equates to a higher yield. Returns on future properties will depend on the selling price, usage of the property, and whether it is a short- or long-term rental. 'That said, typical net yields are between 6-8 per cent after the aforementioned has been taken into account. I would expect similar new returns, with a few outliers above and below that range,' Young added. Investors also need to bear in mind that there may be a lock-up period for their investment. Innovation Dubai is making a name for itself as a leading crypto and blockchain hub, along with being a pioneer of real-world asset (RWA) tokenisation of property. The Prypco and DLD property platform means that a young professional in Dubai can invest in a prime villa or luxury apartment without the complexity or cost of full ownership. 'This isn't just innovation for innovation's sake. It's a structural shift in how wealth can be built and shared,' added Tokinvest's Blom. 'Fractional investment creates liquidity, flexibility, and access, which have been barriers in traditional real estate investing. With lower entry points, more people can participate, which in turn leads to (hopefully) increased capital flow into the sector.' The launch of the government-backed real estate tokenisation project and the success of platforms like Stake show the huge demand for this type of innovative property ownership. But as more properties are bought up by companies for fractional ownership, it could lead to higher prices in the property market. 'It's a valid concern, and one we take seriously. When more capital flows into real estate, demand can increase, which could potentially put upward pressure on prices. But it's important to look at the bigger picture,' said Blom. 'The goal isn't to inflate markets, it's to broaden access and enable more efficient use of property assets. If managed responsibly, tokenisation and fractional investing can help smooth the peaks and valleys of global real estate, not exacerbate them.' Vanessa Bayma, the founder of CBC Consultancy and Events, has invested in two fractional properties using Stake. Currently, she is getting a 6 per cent return with rental income. 'We were interested in crypto investing but found it volatile. And didn't have enough money to own properties outright,' she explained. She is interested in making more fractional property investments. 'Sometimes people are bedazzled by short-term investments such as crypto or volatile stocks. My father always said that real estate is the safest investment. Granted, we can't afford to buy full properties, but this style of investment allows us to diversify.'
Tourism Breaking News
20 hours ago
- Tourism Breaking News
Oman hospitality sector welcomed 820,365 guests in 2024 : OMRAN
Post Views: 47 The Oman Tourism Development Company (OMRAN Group) announced that the hospitality sector welcomed 820,365 guests across its hotel portfolio in 2024 — a 6% increase compared to the previous year. The portfolio achieved an average occupancy rate of 45%, marking a 2.6% increase year-on-year. A major milestone was achieved with the official opening of JW Marriott Muscat, further enriching the luxury hospitality landscape in the Sultanate of Oman. As part of its efforts to position Oman as a premier luxury tourism destination on the global map and to attract the world's leading hospitality brands, OMRAN Group announced several strategic projects, most notably the Middle East's first Club Med Resort that will be developed in Musandam, and the signing of a strategic partnership with Santani Wellness Resorts to introduce wellness tourism in Al Dakhiliyah Governorate. The Oman Tourism Development Company (OMRAN Group) has announced strong financial and operational results, underscoring the Group's sustained efforts and corporate excellence in advancing tourism development and supporting sustainable economic growth in the Sultanate of Oman, in close collaboration with key stakeholders. In 2024, the Group recorded a net profit of OMR 25.2 million and total revenues exceeding OMR 58.3 million, reflecting operational efficiency and the high standards of excellence embraced across its business operations. These achievements were presented during the Group's recent Board of Directors meeting, where the Board reaffirmed its continued commitment to reinforcing the Group's role in advancing economic diversification and amplifying its impact as a key catalyst for tourism development and investment in the Sultanate. Demonstrating its ability to attract high-quality investments, OMRAN Group secured over OMR 156 million in Foreign Direct Investment (FDI) during 2024. This achievement aligns with Oman Vision 2040 and the national efforts to boost FDI inflows and enhance the contribution of various economic sectors to the GDP. Reinforcing its commitment to sustainability and local value creation, the Group achieved a 40% In-Country Value Index in 2024, with total spending exceeding OMR 19 million in support of SMEs, which accounted for 34.7% of overall procurement spending. Furthermore, the Group created 370 new job opportunities for local talents, achieving an Omanisation rate of 94% within Oman Tourism Development Company SAOC and 53% across the Group, highlighting its dedication to empowering national talent and supporting the local economy. In line with its vision to enhance corporate governance practices, OMRAN Group launched its Environmental, Social, and Governance (ESG) Framework during the year, reinforcing its commitment to global sustainability standards, transparency, and excellence across all its operations and projects. The positive results achieved by OMRAN Group in 2024 reaffirm its leading role as a catalyst for tourism development in the Sultanate of Oman. Through pioneering projects, strategic partnerships, and innovative initiatives, the Group continues to strengthen its position and contribute to Oman's journey towards a diversified and sustainable economy.
The National
a day ago
- The National
King Abdullah II leads tributes as Jordan celebrate historic World Cup qualification
Ali Olwan nets hat-trick in 3-0 win over Oman to seal place at 2026 tournament in US, Canada and Mexico Jordan's King Abdullah II led the tributes as his nation celebrated reaching the Fifa World Cup for the first time in their history. Ali Olwan was the hero for the Jordanians as he netted a hat-trick in a 3-0 win over Oman in Muscat on Thursday night. The jubilant away supporters were joined by Crown Prince Hussein, who was seen celebrating in the stands. The win put the 2023 Asian Cup runners-up into a commanding position to secure a top-two finish in AFC qualifying Group B behind leaders South Korea, and their progress was confirmed a few hours later when the Koreans beat Iraq 2-0 in Basra. Jordan's King Abdullah II congratulated the team on social media. 'This historic qualification is well-deserved by our team, which includes stars and cadres of whom we are proud,' he wrote on X. 'Special thanks go to our loyal fans who have been our support and encouragement.' Jordan's qualification for the expanded 48-team tournament in the USA, Canada and Mexico extends a rewarding period for the national team after their run to the Asian Cup final in 2023. In that competition they eliminated South Korea in the last four before eventually losing to hosts Qatar in the final. The South Koreans cemented top spot in AFC Group B and consigned Iraq to another round of qualifying with a routine victory at the Basra International Stadium. The Iraqi cause was not helped by a first-half red card for Ipswich striker Ali Al Hamadi and goals after the break from Kim Jin-gyu and Oh Hyeon-gyu confirmed their defeat. The Iraqis will drop into the fourth round of qualifying where they will be joined by either Palestine or Oman who meet next week in a winner-takes-all clash. Palestine kept their hopes alive with a 2-0 win over Kuwait on Thursday thanks to goals from Tamer Seyam and Wessam Abou Ali. The six teams who finish third and fourth across the three AFC groups will enter a fresh phase of qualifying featuring two groups of three with the winners of each section sealing a place at the finals. Four of the six teams – UAE, Qatar, Indonesia and Iraq – are already known, with most likely Saudi Arabia and one of Palestine and Oman to complete the line up. Saudi Arabia alive but face steep task Saudi Arabia and Australia will go head-to-head next Tuesday for the second automatic spot in Group C. Australia remain in pole position following their last-gasp win against group leaders Japan in Perth. Defender Aziz Behich was the home hero in front of more than 57,000 fans, rifling into the corner in the 90th minute to give Tony Popovic's side a crucial 1-0 victory. 'We know there's room to grow and room to improve, but we've done something special tonight,' said Popovic, who saw his team outplayed for long periods by an experimental Japan side. Saudi Arabia ensured the race for second place will go down to the wire courtesy of a 2-0 win against Bahrain in Riffa. Goals in either half from Musab Al Juwayr and Abdulrahman Al Obud saw Herve Renard's men stay three points behind second-placed Australia. However, the Saudis will have to win in Jeddah by five goals to leapfrog the Socceroos. Popovic, who replaced Graham Arnold in the dugout in September, added: 'We've all played a part in getting us to this point. We want to go to Saudi Arabia and really finish the job off.' Also in Group C, Patrick Kluivert's Indonesia kept alive their hopes of reaching a first World Cup since the country's independence in 1945 with a 1-0 win over China. That leaves Indonesia fourth in the group, one point behind Saudi. Ole Romeny scored the only goal, his controversial penalty just before half time following a VAR check leaving China rooted to the bottom of the group and thus ending their hopes of making a second World Cup. In Group A, Iran and Uzbekistan confirmed qualification while the UAE and Qatar will move into the next round of qualifying.
