The opening of Oman’s real estate market to foreigners began in 2002, as part of the “Vision 2020” plan, which aimed to diversify Oman’s economic base and reduce its dependence on oil revenues. In December 2002, GCC nationals gained the right to own real estate for residential or investment purposes. In February 2006 other nationalities were also given the right to own real estate, but only in Integrated Tourism Complex (ITC) developments.

Recently, the government has been again considering opening up more areas for foreign homebuyers, hoping to buoy the property market. The recommended reforms include allocating special zones where expats can buy properties at more reasonable prices as compared to tourist complexes.

Under current laws, expatriate owners automatically get residency rights for themselves and their immediate families when they buy property in designated ITC developments.

Growing expat numbers fuelled a real estate boom. The expat population rose by more than 12% per annum during the period 2004-2015, and by Q1 2016 there were more than 2 million expats in Oman, according to the National Centre for Statistics and Information. The expatriate workforce reached 1,747,000 in Q1 2016.

Foreigners account for almost 90% of all workers in Oman’s private sector, according to the Manpower Ministry. Oman’s population is 57% native Omanis and 43% expatriates, far from the 75:25 ratio of Omanis and expats in 2004. Oman’s population is young, with a median age of 24.9 years. Oman’s total population was 3.84 million in 2015, and has been growing at an annual average rate of 3.6% since 2004.

The major ITCs such as Al Mouj Muscat (formerly The Wave) and Muscat Hills Golf and Country Club have led the country’s housing market in terms of growth and value. In recent years, these ITC developments have continuously attracted owners and tenants, with "virtually zero" vacancies and high rents, according to Savills Oman.

ITC prices fell during 2009, but these properties remain in demand due to their superior design, setting and facilities. In Al Mouj Muscat and Muscat Hills, resale values of apartments are stable, according to some local property experts.

Homebuyers are now leaning towards lower priced residential properties. This is reflected in the latest sales transactions figures from the National Centre for Statistics and Information, which showed that transaction volumes increased in the first two months of 2016 from a year earlier but traded value declined substantially to OMR 563 million (US$ 1.46 billion) in Jan-Feb 2016, from OMR 1 million (US$ 2.6 billion) in the previous year.

Aside from the continuous interest in the ITCs, there have been significant ‘off plan’ sales of new apartment developments in the Muscat neighborhood. Demand has been driven by younger Omanis, who buy 75% of all central area developments, according to Savills Oman. These well-educated and savvy individuals are eager to create their own investment portfolios, buying units they intend to lease out upon completion.

Aside from younger Omani buyers and Gulf Cooperation Council (GCC) nationals, other groups such as Syrians, Iranians also buy houses in the Sultanate.

Newly launched off-plan apartment developments in Oman, Q2 2016:

• In Ruwi/East of Centre, the main business and commercial district of Muscat, prices of one-bedroom apartments start at OMR 30,000 (US$77,942), according to Savills Oman. Two- and three-bedroom apartments are offered in the market for as low as OMR 45,000 (US$116,914) and OMR 60,000 (US$155,885), respectively.
• In Qurum, Muscat’s upmarket suburb, prices of one-bedroom apartments range from OMR 38,000 (US$98,727) to OMR 45,000 (US$116,914). Prices of two- and three-bedroom apartments start from OMR 65,000 (US$168,875) and OMR 85,000 (US$220,837), respectively.
• In Al Khuwair, one-bedroom apartments are priced from OMR 38,000 (US$98,727) to OMR 45,000 (US$116,914). Prices of two-bedroom apartments start from OMR 65,000 (US$168,875) while for three-bedroom apartments, prices start from OMR 85,000 (US$220,837).
• In Bausher, one of the newly established residential areas in Muscat, one-bedroom apartments are priced from OMR 33,000 (US$ 85,737) to OMR 45,000 (US$ 116,914); two-bedroom apartments, from OMR 45,000 (US$ 116,914) to OMR 65,000 (US$ 168,875); and three-bedroom apartments, from OMR 70,000 (US$ 181,866) to OMR 75,000 (US$ 194,856).
• In Al Mawella/East of Centre, one-bedroom apartments are offered for as low as OMR 25,000 (US$ 64,952) while two-bedroom apartments are priced from OMR 30,000 (US$ 77,942). Prices for three-bedroom apartments range from OMR 35,000 (US$ 90,933) to OMR 40,000 (US$ 103,923).

The housing market is expected to remain steady in the coming months, amidst weakening economy. The economy is projected to expand by just 1.8% this year, down from an annual growth rate of 4.1% in 2015, and the lowest growth since 2004, according to the International Monetary Fund (IMF).

Oman mulls opening more areas for expat homebuyers

Recently, the government, together with Oman Real Estate Association (OREA), has been considering opening up more areas for expats and foreign homebuyers.

The problem is that many of the integrated tourist complexes are beyond the means of lower paid expats living and working in Oman. The recommended reforms include allocating special zones where expats can buy properties at more reasonable prices as compared to tourist complexes.

“This has to be done on real demand, and not as a speculative market, where buyers purchase a house with the hope that it will become more valuable at a future date,” said OREA vice chairman Hassan Juma.

The reform, if approved, is expected to boost Oman’s real estate market.