Strong and positive momentum is expected to continue in the Sultanate of Oman’s real estate sector thanks to the shifting trends suggesting that the property market is once again on the investor radar.
After softening demand due to the pandemic, the real estate market has seen an upswing since the third quarter of the previous year, backed by a solid structural foundation and gain in demand.
Along with a slew of decisions and measures, the Omani government’s new ownership scheme that allows foreigners to own properties outside integrated tourism complexes (ITC) is expected to attract capital investments in the property market.
Dr Khalid bin Saeed al Ameri, Chairman of the Board of Directors of the Omani Economic Association, in a dialogue session last week, invited proposals from the real estate experts to come up with visions that can contribute to increasing the sector’s attractiveness to investors.
“The flexibility of laws, legislation, and regulatory and incentive measures taken in the real estate sector has a direct role in stabilising real estate markets and maintaining investor confidence”, he said.
The meeting reviewed purchasing power, such as the impact of value-added tax on residential sales, the availability of financing and interest rates, and availability and clarity of data, such as daily trading, clarity of investment directions and future plans in the real estate sector.
The session also touched on technology in the real estate sector, applications and crowdfunding.
The total traded value of real estate activity exceeded RO 1.3 billion at the end of last July, and the total traded value of the property rose during last July only to 213.1 million Omani riyals, an increase of 27.4 per cent compared to June 2022.
Dr Khalid indicated that the fees collected for all Legal transactions amounted to RO 35 million, a decrease of 37.8 per cent compared to the end of July of last year, while the traded value of sales contracts increased by 0.1 per cent compared to the end of July 2021, to reach RO688 million.
The number of sales contracts reached RO 40.110 million contracts, down by 18.9 per cent.
The Oman government’s focus is more on making housing affordable and available for everyone. The push for ‘Housing for All Citizens’ fuelled the demand for affordable housing and, in turn, generated much-needed liquidity in the sector.
Oman’s Ministry of Housing and Urban Planning has presented plans for five new constructions totalling 4,800 housing units, catering to an estimated 24,000 people, following the success of its first Integrated Housing Development Project in Barka based on the Public-Private Partnership (PPP) model.
The ministry has unveiled new opportunities for real estate companies and institutions specialising in real estate development (both domestic and international) who have experience, competence, financial and administrative capability in real estate development and who wish to compete, file an “Expression of Interest” to develop.
Last week, the ministry announced five more new sites for real estate developers in the governorates of Musandam, Dhofar, South Al Sharqiyah, North Al Sharqiyah, North Al Batinah, and South Al Batinah.
According to market intelligence and advisory firm Mordor Intelligence, the residential real estate market in Oman is expected to register a compound annual growth rate (CAGR) greater than 13 per cent during the period from 2022 to 2027.
This forecast for Oman’s property market comes amid a report published by Next Move Strategy Consulting that the global real estate market generated $ 9.52 billion in 2021 and is estimated to reach $ 14.55 billion by 2030, witnessing a CAGR of 4.8 per cent from 2022 to 2030.
In its outlook, the Central Bank of Oman said in a report that, unlike many other jurisdictions, the real estate market in Oman followed a different course during the past few years.
“The changes in the population profile during the pandemic exerted pressure on some segments of the Omani real estate market that had signs of oversupply even before the onset of the pandemic”, the Apex Bank points out in its Financial Stability Report 2022.
Due to Covid-19, as pointed out in the report, Oman’s real estate sector continued to feel the consequences of slower economic growth in 2020. The residential sector has been the hardest hit, with a slew of new developments putting downward pressure on rental and sales prices.
“Since the recent highs in 2014, rental rates have fallen by more than 25 per cent, and prices have continued to tumble in 2019 amid fears about oversupply and expatriate employees fleeing the nation”, the report points out.
Expatriates make up nearly 40 per cent of Oman’s population and account for a large portion of the country’s residential demand. While the Omani population has continued to rise steadily, the expatriate population, a major user of residential rental properties, declined by 15 per cent during the first year of the pandemic affecting the demand for the property.
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