Oman real estate market poised for growth amidst economic diversification
MUSCAT: The Sultanate of Oman's real estate market demonstrated resilience in the first half of 2025, despite global economic uncertainties, according to the latest market research report by Hamptons International. The report highlights steady performance across key submarkets, driven by infrastructure investments, Oman Vision 2040-aligned reforms and a growing emphasis on sustainability and economic diversification. These initiatives have bolstered investor confidence and contributed to the recovery of logistics, tourism and mixed-use assets.
SUBMARKET PERFORMANCE AND SECTOR HIGHLIGHTS
Muscat emerged as the most active real estate hub, benefitting from government-backed urban development projects and increased demand for high-end residential and commercial properties. Al Duqm continued to attract industrial and logistics investments, leveraging its strategic location and the expansion of the Duqm Special Economic Zone. Suhar maintained steady demand for warehousing and manufacturing spaces, while Salalah's real estate sector thrived on tourism-related developments.
The industrial and logistics sector remains one of the most attractive for long-term investors, with yields ranging from 9.5% to 11%. Cold storage, e-commerce fulfilment centres and facilities near free zones such as Suhar and Al Duqm are in high demand, supported by infrastructure growth and trade expansion under Oman Vision 2040. However, Oman still lags behind regional peers like the UAE in ESG-compliant industrial stock.
ECONOMIC GROWTH AND MARKET TRENDS
Oman's economy expanded by an estimated 2.3% in H1 2025, driven by growth in logistics, manufacturing and tourism. Brent crude oil prices stabilised at an average of $62 per barrel, ensuring fiscal stability and supporting government revenues. Non-oil GDP contributions rose above 35%, signalling progress in reducing reliance on hydrocarbons. Inflation remained moderate at 1.8%, while private sector activity and job creation in emerging industries showed positive momentum.
The residential market saw stable demand for mid-income apartments and villas, with rents rising slightly in core Muscat districts such as Al Mouj and Al Qurum. Affordable housing initiatives aligned with Oman Vision 2040 gained traction, while professionally managed gated communities commanded a 10-15% premium over standalone properties. The report projects a compound annual growth rate of 9.19% for the residential real estate market, increasing from $4.75 billion in 2024 to $6.60 billion by 2029.
HOSPITALITY AND RETAIL SECTOR INSIGHTS
The hospitality sector recorded a rebound in business travel and regional tourism, with hotel occupancy in Muscat averaging 59% in H1 2025. Boutique and eco-resorts gained popularity in Dhofar and Al Jabal Al Akhdhar, supported by government-led sustainable tourism initiatives. The Average Daily Rate for 4- to 5-star hotels grew by 7%, while luxury and eco-tourism hotels reported above-average occupancy rates.
Retail performance stabilised in urban malls and destination centres, with Mall of Oman and Oman Avenues Mall maintaining high occupancy rates. A clear trend towards F&B and experiential retail emerged, with landlords adopting hybrid leasing models to attract new tenants.
OUTLOOK FOR H2 2025
Looking ahead, Oman's real estate market is expected to maintain steady growth in the second half of 2025, supported by government initiatives, infrastructure expansion and increasing investor interest. Key growth themes include sustained demand for industrial and logistics assets, affordable housing initiatives, tourism-led investments and ESG integration. Strategic projects in Al Duqm, Suhar and Muscat will play a catalytic role, while Salalah and Dhofar are set to benefit from tourism expansion.
With Oman Vision 2040 shaping real estate policy and infrastructure spending, Oman's commitment to economic diversification and sustainability positions the sector for continued growth, offering lucrative opportunities for developers and investors alike.
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