3 days ago
Opportunity Oman: Real estate market and its vital role in economic growth
Oman's real estate sector is undergoing a dynamic transformation, playing a crucial role in the nation's economic growth. The sector's evolution has positioned it as a cornerstone of Oman's economic development strategy, contributing significantly to job creation, attracting investment, and boosting the national GDP.
A significant impact of Oman's thriving real estate sector is its contribution to job creation. The industry generates employment across various sectors, from construction and architecture to property management and real estate broking. The ripple effect extends to supporting industries, creating a robust employment ecosystem. Market analyses suggest that for every direct job in real estate development, approximately three indirect jobs are generated in related sectors.
According to the 7th edition of the Al Habib Annual Property Market Report series that provides latest up to date insights for the economy and Oman real estate market, a soft optimum in a period of continued stability.
The government's Vision 2040 strategy recognises real estate as a key pillar in reducing the country's reliance on oil revenues. By developing a strong property market, Oman is building a more diverse and resilient economy. This transformation is evident in the growing number of mixed-use developments and integrated tourism complexes (ITCs) across the country, creating new lifestyle opportunities for residents and visitors.
Oman's progressive policies have made it increasingly attractive to both foreign and domestic investors. The government's new investor visa programs, offering residency options for property investors, have been highly effective in attracting foreign capital.
The real estate sector's influence extends far beyond property development. The tourism industry has experienced significant growth through the construction of hotels, resorts, and leisure facilities. The banking sector has benefited from increased demand for mortgages and property financing products, contributing to the overall development of Oman's financial services industry. This interconnected growth has created a robust ecosystem that supports sustainable economic development across multiple sectors.
The construction sector has also seen substantial growth as demand increases for residential, commercial, and tourism properties. This growth has created a positive cycle of economic activity, supporting various auxiliary industries and services, from building materials suppliers to interior design firms.
The Ministry of Housing is playing a significant role in improving the business environment in the real estate sector in the Sultanate to encourage local and international investors.
Market performance has been notably strong, with trading volume experiencing a 6% rise in 2023. In the first quarter of 2024, the total value of real estate trading reached RO 587.5m, according to the National Centre for Statistics and Information. Foreign investment has been particularly robust, with Kuwait leading the charge in 2023 (RO2 6.7m across 319 deals), followed by India (RO 12.2m in 70 transactions) and the United Arab Emirates (RO 5.3m across 319 transactions).
The government's progressive policies have enhanced Oman's appeal to both foreign and domestic investors. The Investor Residency Programme, offering 5 to 10-year residency options for property investors, has proven highly effective in attracting foreign capital. This success is evident in the increasing number of international investors choosing Oman as their preferred regional investment destination. Several major developments are driving sector growth:
- Sultan Haitham City and new city projects in Salalah, Sohar, and Sur.
- Development of new economic zones and industrial hubs.
- Expansion of integrated tourism complexes (ITCs) and luxury hospitality projects.
- Significant infrastructure investments in road networks, airports, and planned public transportation systems.
These projects are strategically positioned to meet rising regional and international demand while creating new lifestyle opportunities for residents and visitors alike. The sector is expected to attract approximately 70% of total foreign direct investment (FDI) in Oman in the coming years.
The government's focus on infrastructure development has been particularly noteworthy. Major investments in road networks, airports, and planned public transportation systems are enhancing connectivity and creating new growth corridors for real estate development. These infrastructure improvements are not only making various locations more accessible but are also opening up new areas for development and investment.
While the market shows strong potential, it faces certain challenges that are being actively addressed. Market liquidity, while improving, remains an area for development. The government's continued focus on economic diversification is helping to reduce the market's exposure to oil price fluctuations. Additionally, efforts to streamline property registration processes and enhance market transparency are making it easier for investors to participate in the market.
Looking ahead, Oman's real estate sector is positioning itself for sustainable growth. There is an increasing focus on green building practices, which appeals to environmentally conscious investors and tenants. Plans for improved public transportation infrastructure, particularly in Muscat, are expected to enhance property values and accessibility across different locations.
With strong government support, progressive policies, and growing investor interest, the sector is well-positioned to continue its role as a key driver of economic growth and development. The combination of strategic government initiatives, market reforms, and innovative development projects creates a compelling environment for both domestic and international investors. As Oman continues to develop its real estate sector, it strengthens its position as an attractive destination for property investment while building a more diverse and resilient economy for future generations.
Dr Yousuf Hamed al Balushi
The writer is founder and CEO - Smart Investment Gateway, economists, board adviser & business transformation mentor.
