Oman’s growth path since the turn of the century has seen its real estate market develop into one of the most interesting in the region. Equilibrium has been reached after the correction following the global financial crisis, and projects in several segments have pushed on. Continued government investment has helped offset some of the effects of lower oil prices, while strong demand in a range of niches has brought success to the better-planned developments.

Recent Performance

From 2008 to 2011, the Omani real estate market saw a significant downward correction following strong performance in the 2000s, when the Gulf as a whole enjoyed the fruits of rising oil prices and investor enthusiasm for emerging markets. The events elsewhere of the Arab Spring in 2011 prolonged the economic cooling, as investors started to shy away from the region. However, Oman itself saw little unrest, and the government moved swiftly to address grievances with poverty alleviation measures and public sector wage rises.

In 2015 the fall in the oil price across the Gulf region was expected to take some wind out of the industry’s sails. Nonetheless, projects have continued to come onto the market, with those that are well located and designed continuing to do well. “All developing economies will exhibit a natural demand for real estate; the trick is developing the right property at the right time,” Benjamin Cullum, general manager at Hamptons International in Muscat, told OBG.

The sector’s performance over 2016 will be dependent to a large extent on the oil price. Oil accounts for 50% of Oman’s GDP and 90% of its public finances, according to Dutch financial institution Rabobank, and lower prices have a drag effect on the economy, squeezing the government’s budget. In turn, major public projects have a significant impact on most segments of the real estate market, due both to their effect on the broader economy and in drawing in expatriates and international companies to help with implementation, stimulating demand for residential and commercial property in particular.

The price of a barrel of Brent crude oil stood at around $45 in late November 2015, having fallen from $65 to $70 in the middle of the year. A Reuters survey that month forecast an average of $58 for 2016, while the US government Energy Information Administration has forecast $56. As a result, concerns about oversupply in some segments have been raised.

Nonetheless, Oman is still expected to see GDP growth of 4.4% in 2015, contracting to 2.8% in 2016, according to the IMF. Job creation has continued at a steady pace, thanks to rising oil production and the government continuing to push forward with a range of major projects. Sectors including construction, business services, finance and architecture are benefitting, both creating better-paying jobs for Omanis and drawing expatriates to the country. “In 2014, there was growth, but there has been less in 2015; the market has been more lacklustre,” Christopher Steel, managing partner at Savills Oman, told OBG. “But we think real estate in Oman continues to offer a solid option. Scaremongers would say that the fall in the oil price could catalyse a fall in the market. But we don’t agree – we are not seeing a fall in values.”

Two-Tier Market

Muscat is in many ways seeing the emergence of a two-tier real estate market. Projects that target niches where there is still strong demand, such as high-end offices, units in integrated tourism complexes (ITCs, see analysis), gated communities and shopping malls, are flourishing.

However, in some cases, as seen in the residential market during the second half of 2015, less well planned developments can drag down overall values. “Correctly priced products for the domestic market are holding value,” Steel told OBG. “In other areas there is a danger of flatlining values. This is especially true of more speculatively built apartments built only for leasing, where there is a potential for oversupply.”

One challenge faced by developers is a relative paucity of research on market projections, M Sudhakar Reddy, CEO of Al Habib, an Omani real estate company, told OBG. Moreover, the lack of urban planning in the past and the market’s fragmented nature have contributed to the gap between successful developments and those that have found the going hard.

“In Dubai, there is a broader masterplan of roads and zoning and so on, with one lead developer,” Matthew Wright, head of consultancy and industrial at Cluttons Oman, a real estate company, told OBG. “But in Oman it is different. There are a lot of small players developing small parcels of land, so some developments are slightly ad hoc. The main opportunities that exist are for focused developers with a specific target market, rather than developers who are just mushrooming new buildings with no real goal or plan.”


Location is an essential element of any property market, and this is especially true of Muscat. Poorly located developments have failed, while go-to areas – including ITCs, expanding districts close to the airport, and upmarket areas near the old centre – are continuing to see price increases even as the broader market has cooled. “Airport Heights and beyond are promising,” Steel told OBG. “Areas like this are likely to see the greatest activity and value enhancement by projects being put up there, all of which are magnets for attracting better value growth.”

Bank Muscat’s move from Ruwi to new headquarters at Airport Heights is widely seen as a landmark in a trend of major companies moving westwards, and has been followed by residential, leisure and commercial developments. The Oman Cultural Complex, which will include the National Library and National Archives, is due to open on a 40-ha plot in Airport Heights in 2016. While development to the west is a major focus, values have also held up solidly in more central upmarket areas such as Shatti Al Qurum and Madinat Sultan Qaboos, though Steel does not see a great deal of activity as of late 2015.

Muscat’s old central business district, Ruwi, and nearby Muttrah have seen slowing value growth. Despite their location, the somewhat crowded area is no longer the go-to area for new office space, as companies locating or relocating in Muscat have increasingly been drawn to the west of the city.

As of the final quarter of 2015, monthly rents for two-bedroom units ranged from OR300 ($777) in Ruwi, Seeb and Al Khoud, to OR850 ($2201) at the Al Mouj ITC, and OR750 ($1942) outside ITCs in Shatti Al Qurum, according to Savills. Meanwhile, rents for four-bedroom properties started at OR475 ($1230) in Ruwi and Al Wattaya, going up to OR1900 ($4919) in the two main ITCs and Shatti Al Qurum.


The residential leasing market saw five consecutive quarters of stability to the second quarter of 2015, as steadily rising demand matched new projects coming onto the market and the economy expanded at a steady pace. However, the relatively low price of oil remained a concern, with the view being that the market could not sustain its equilibrium if the price did not pick up.

Even so, it remains questionable what effect the oil price has had on the residential real estate market in Oman thus far. The fall has been somewhat offset by rising production, with output hitting a record high in June 2015. The increasing supply of more affordable residential stock has, however, had an impact. For example, in the third quarter of 2015, residential rents across Muscat fell by 4.7%, according to Cluttons. The villa segment was particularly affected, with rents sliding 5.9% to an average monthly rate of OR1100 ($2848). But the impact was felt unevenly across the city, with Muscat Hills, one of the most desirable ITCs, seeing rents fall just 3.4% – or by OR42 ($109) a month – and Azaiba-Ghubrah North (between Qurum and the airport) dropping 13.9%. The rental fall in those districts was attributed by Cluttons to a “sharp upturn” in more affordable housing stock, driving down rents for a number of subsections.

In several areas, rents continued to hold up solidly, including Al Hail Mawaleh, Al Maabela, Sur Al Hadid and Al Mouj (the market-leading ITC, formerly known as The Wave). Here the perception of high-quality, well-managed stock remained robust, and demand was therefore steady. In some cases, rents have continued to rise slightly. Indeed, the best projects across a range of price segments – not just in top-end areas – have seen a particularly strong uptake.

Cluttons has cited the example of the Saud Bahwan complex, which is fully let but has a long waiting list. Two-bedroom apartments in the complex rent for OR550 ($1424) to OR625 ($1618) a month. Even in the prevailing climate, the company can expect similarly high demand for the Al Taminat residential housing project due to be launched by the Public Authority for Social Housing in Bausher in 2016.

With the job creation rate still at a healthy level, developers sitting on land banks have moved forward with new projects. They are targeting middle-income groups in particular, looking at budget levels at Muscat’s average level – OR500-550 ($1295-1424) a month, and apartment projects with one- and two-bedroom units. With a growing number of expatriates coming to the sultanate to work on public projects in particular, Cluttons sees rising demand for gated community developments of the sort popular elsewhere in the Gulf, but which remains relatively new to Oman. These projects, like the existing ITCs, are also popular with upwardly mobile Omanis.

Another significant aspect to the expatriate market is demand from Iranian, Syrian, and Iraqi buyers who are seeking investment potential as well as permanent resident status in Oman. Generally speaking, these buyers have a budget of around OR130, 000-150,000 ($336,570-388,350), according to Cluttons.

Expatriate Market

The overall structure of the high-end expatriate retail market has shifted somewhat in recent years. Growing numbers of foreign professionals are coming to Oman on contracts lasting between one and three years, often as consultants and contractors on public projects.

This has altered the dynamics of a segment that was once dominated by expatriates coming to Oman to run businesses, and staying for long periods of time, often lasting a decade or longer. However, landlords very rarely give leases lasting less than one year. This has led to a growth in serviced apartments catering for those coming to Oman for periods of several weeks or months, but of less than a year in total.

In its “Property Briefing” on Oman in November 2015, Savills noted two other trends in the expatriate professional market. Firstly, through 2015 there has been a trend of expatriates who are either single or coupled coming to Oman, rather than families. This can be attributed in part to multinationals looking to cut back on costs such as education and health care. This is likely to have led to greater demand for smaller accommodation units rather than the large villa-style units preferred by many previous arrivals.

New Arrivals

Secondly, many new arrivals are coming to Oman from other GCC member states and are therefore used to high-quality group housing that is equipped with on-site facilities that includes swimming pools and gymnasiums, as well as other services. This has pushed up demand for this sort of development, of which there remains a shortage in Oman.


Commercial rents held up well through 2015, as the government continues to move ahead with major projects that have drawn in international contractors and expanded local businesses. Rents have remained stable for more than two years. In some cases, landlords have even increased rents, with a shortage of high-quality space continuing after the 2013-14 period, in which much new grade-A space was taken up by hydrocarbons companies as the sultanate started work on projects, such as the Khazzan gas field. As a result, Savills expects rents to stay firm over the short term. “There could theoretically be an oversupply of office space, but we don’t believe that there will be,” said Steel. “Companies are decamping into new grade-A buildings, so there’s a natural take-up of the space being developed.”

In its Q3 2015 report, Cluttons noted that, while hydrocarbons companies have been consolidating operations globally, leading to lower demand in Oman, companies in sectors such as construction, law, technology, media and telecoms continued to grow. Generally smaller operations, they typically require office space of 250 sq metres or less. Nonetheless, the company forecasts slight falls in rents in 2016 of 3% to 4%, due to new supply and the slowing global economy, as well as the downside risk to government investment of possible oil price shocks. While the “prevailing rent” for grade-A space is OR7-8 ($18.12-20.71) per square metre, it can go up to OR9 ($23.30) for the best buildings that provide full service, on-site facilities – and ample parking space for employees, according to Steel. While such developments see a rapid take-up of space, those that are poorly planned can see rents sink as low as OR3 ($7.77) per sq metre.

The issue of parking space has for too long been overlooked by many developers in Muscat, and is becoming an increasingly influential factor in determining whether office developments succeed. Indeed, Savills Oman does not take on clients without sufficient parking facilities at their developments. The company emphasises the need for at least one parking space for every 25 square metres of office floor leased. In Germany the ratio is usually one space per 35 sq metres, but many buildings in Muscat fall short of this. However, with downside risks to demand mounting, clients are becoming increasingly cost-sensitive. “Until a few years ago, there was not a lot of office space, and some companies operated out of villas,” Wright said. “There’s still a limited stock of better grade office space, and there’s an opportunity in this space. But it’s a difficult market – better facilities require amenities such as parking and so on, but that adds to the cost, and the market is not always inclined to pay for these additional services.”


Muscat’s retail mall market is buoyant, and as of autumn 2015, all malls were at 100% capacity, with long waiting lists, according to Steel. Meanwhile, new brands have continued to arrive. The city’s leading established malls include Muscat City Centre, opened in 2001; The Avenues Mall (2015), Panorama Mall (2015), Muscat Grand Mall (2012), Qurum City Centre (2008) and Markas Al Bahja Mall (2002).

In June 2015, Tilal Development Company and Bank Muscat Meethaq Islamic Banking signed a deal worth OR30m ($77.7m) to finance the expansion of Muscat Grand Mall. The mall has around 150 retail outlets, and is at the heart of Tilal’s “Tilal Complex” development, which also includes 30,000 sq metres of commercial offices, 250 freehold apartments and 115 four-star hotel apartments. The expansion project, first announced in 2013, will add space for 100 new retail outlets along the mall’s scaleable development plan. In November 2015, City Centre Muscat’s OR35m ($90.6m) expansion project was completed, adding 10,000 sq metres of gross leasable area (GLA) and 60 new shops, including 12 lifestyle and fashion brands. The new brands include cosmetic brand Lush and US burger chain Shake Shack. Other stores added include Virgin Megastore, Bershka, Koton, and New Look. The mall has also recently added a 10-screen VOX cinema, and 700 extra parking spaces. The mall has annual footfall approaching 10m.

City Centre Muscat is owned by Majid Al Futtaim (MAF), which runs some of the largest malls in the region. Construction on its Mall of Oman is expected to start in the last quarter of 2016, according to local press reports. The mall will be the country’s largest, sitting on a 157,000-sq-metre site, and is due to open by 2020. The UAE-based company is also working on the development of My City Centre Sur, a OR12m ($31.1m) project that will bring 16,000 sq metres of GLA, with 50 retail outlets and French hypermarket giant Carrefour as an anchor. City Centre Qurum is being expanded, with MAF introducing a new anchor tenant and increasing car parking space. The 23, 200-sq-m mall has an annual footfall of 3.6m people.


Although economic growth is expected to slow in 2016, strong demand in several segments, as well as the government’s desire to implement headline big-ticket projects, are upsides for the market.