While Oman has been experiencing a construction boom, the real estate sector has shot to international fame with projects like The Wave, Blue City and Barr Al Jissah residences.
The tide of development that has swept the Sultanate is as much evident in the real estate sector as in others. Experts attribute various reasons behind this phenomenon. While some say this boom has been fuelled by a high demand and increased government and private sector investment, others underline the age group of the Omani population.

It has been estimated that about 40 percent of the sultanate’s population is young – in the age group of 20 to 40 years. This generation of young men and women – equipped with knowledge and skill – have more desire to build or purchase their own houses than the previous one. These young men and women also have greater purchasing power leading to a higher demand for land.

Higher inflows of foreign capital resulted from the expansion and diversification of the economy. This phenomenon has again fuelled the cycle for more residential, retail and business space. The state has been releasing much more land in the past few years, opening up regions across the country for development, especially for residential use. Figures indicate that the increase in the number of residential plots made available grew 600 percent between 2003 and 2005.

A rush of activity on the real estate front in Oman is often fuelled by anxiety that the prices of property might soar to great heights owing to the demand, as is evident in some other Gulf countries, such as the UAE and Qatar. Omanis are keen to invest before a meteoric appreciation of land and property.
Thomas Alexander, managing director, Al Adrak LLC, feels the real estate boom has mainly been driven by the economic liberalisation. “Everywhere in the Gulf it’s booming and Oman can’t lag behind,” he says.
Moreover, the real estate market is saturated in the UAE and Qatar. Now Oman is the destination. “It has everything to attract investors: the booming economy, liberalised policies, and a safe and pristine environment.”

Expatriate workers are also a driving force behind the boom in the real estate sector. Since most expatriates depend on rented accommodation, the demand has never waned. In fact, it has been increasing over the years, given that the supply is lesser than demand. As a result, rents have shot up, especially in high-demand areas – Muscat and Sohar. However, the approximately 98 percent occupancy rate has been maintained steadily.

Although Ajit Limaye, Project Director, Al Turki Enterprises, acknowledges the above factors for the boom in the real estate sector, he points out: “The entire Middle East region is reaping the benefit of the oil price boom. As long as the oil prices remain high, the construction sector will continue to move ahead.”
The development of the tourism sector in the sultanate is also another factor. “High profile projects like The Wave and Blue City have contributed to the boom in the construction and real estate sector,” Limaye says.

Driving the residential component of the real estate sector in the country to a great degree is the high end of the market, while there is still a squeeze at the lower levels, with strong demand but fewer developers wanting to target those needs. That said, with the robust economy of the country, more local people will benefit as the cash both flows in and trickles down.

While not everyone will end up in a luxury residence promoted by major developers, home ownership is on the up. So much so, that the prices of some properties are quoted at a premium of 25 percent to 30 percent. Even then, potential buyers not only from the GCC countries but even from India and Pakistan have expressed keenness to invest in real estate in Oman.

Alexander says real properties are in great demand in Sohar, owing to its development and a lot of people from the GCC are investing there. “The demand is so great that local companies are struggling to supply material. Construction materials, therefore, are needed to be ordered much in advance.”
“A healthy appreciation of real estate prices will ensure a healthy growth of the sector,” an executive at a real estate development company says, adding: “Potential buyers should never come in for a shock in terms of the prices of real estate, although a steady rise in property prices is inevitable.”
The boom in Oman’s construction sector is also linked with the recent surge in the number of expatriate workers in this sector. According to an estimate, the number of expatriate workers in the country’s construction sector increased 20 percent to about 145,000 in the first nine months of the year ended September, 2006. In fact, the total number of foreign nationals and Omanis in the private sector has witnessed almost similar growth last year.

A vital component of the construction sector is foreign labour. Officials say that this sector created around 25,000 new jobs for foreign nationals in nine months since December 2005. While, the number of Omanis working in the private sector increased by more than 12 per cent, that of foreign nationals in the same sector grew by more than 13 per cent in the first nine months of 2006.
Consumer spending also recorded the highest increase in last December on holiday seasons, such as Eid, Christmas and New Year. “This increase in the number of expatriate workers has boosted the real estate sector and thereby the economy while most young Omani employees are keen to invest in real estate,” says businessman Abdullah Al Rawahy.

International fame
The Omani real estate sector has shot to international fame with projects like The Wave, Blue City and Barr Al Jissah residences. In fact, the country’s landscape was radically transformed with the formulation of the new rules on land ownership through Royal Decree 12/2006, which allowed foreign nationals to buy property in select, designated areas.
Oman has entered a new era of property investment with the freehold market. It’s The Wave that took the first step on to this territory.

The Wave promises the discerning international purchaser an authentic experience in Arabian style. It has already announced the launch of 42 new townhouses. From March 24, one will be able to purchase a home from its range of townhouses, including plots from 126m to 300m; two, three and four-bedroom properties that are a couple of stories high. The 221 units in Phase I of The Wave, the $805 million integrated waterfront, have all been sold out.

Talking about new projects, Nick Smith, CEO, The Wave, says, “We have announced that Fairmont will be the operator of our first hotel, and the second will be confirmed soon.” The Wave’s Greg Norman Golf Course has been designed with construction starting later this year. The heart of the scheme, Marina Village, is being designed and professionals have been deployed to ensure that waterside dining, shopping and leisure uses combine to create a unique experience. “With construction work now started in earnest, we are no longer selling a dream; it’s a reality,” Smith says.

Freehold is expected to bring about a multiplier effect on the economy. Moreover, many of those who have been staying in rented accommodation can invest in their own property as are those who have long desired to live in a peaceful and serene country like the sultanate.
It will also have an impact on the overall quality of construction. As people from different countries pour in, the competition will increase which, in turn, will prompt developers to concentrate on quality, say experts in the industry.

Eighty-six specially designed luxury residences in four separate areas of Barr al Jissah began sales on May 26, and signs are that they will be taken up with enthusiasm. The residences range in size from one to six bedrooms, and all are luxuriously appointed with every amenity needed for modern living.
James Fox, managing director, PRDnationwide, says, “We are excited to be involved in Oman’s first premium boutique waterfront residential development, which boasts a unique and irreplaceable location and investment opportunity.” The project has signed contracts with PRDnationwide to handle sales and marketing for the project.

The estimated US$ 15 billion to US$ 20 billion Blue City is one of the most flamboyant development projects in the region. It will accommodate around 250,000 inhabitants in an area of about 34sq km. And together with its surrounding areas, it will have the capacity to serve about two million tourists a year.
Three five-star hotels have been planned in the first phase of the project. Each hotel will be equipped with around 200 rooms. The first phase of the project will also include a golf resort hotel, a tourist village with a contemporary souq, a heritage museum, 1,000 apartment units, 1,200 villa/apartments integrated and a waterfront amphitheatre, among other facilities. A boutique hotel designed has also been planned.