Four initiatives under way at the Ministry of Housing (MoH) could have a considerable impact on the broader real estate sector over the course of 2018, namely the centralised processing of transactions, passage of new regulations, software to ease information collection and create indices, and an affordable housing programme. “The aim is to help organise and better regulate a market that has long been fragmented, giving investors new confidence in the end state of their project,” Said Al Zakwani, director of real estate development projects at the MoH, told OBG.
CENTRAL PROCESSING: Starting in mid-2018 a new centre at the ministry will process approvals for real estate projects end-to-end, unifying systems currently split between the MoH, municipalities and regional authorities. Billed as a one-stop shop, employees will liaise on developers’ behalf with other agencies involved in project approvals. A chief aim is to streamline service-level agreements (SLAs) between providers and clients. “This process used to take around a year; now it will be as little as one month,” said Al Zakwani.
DRAFT REGULATIONS: A second goal is to enact SLA terms that better align with international best practices. To this end, the MoH has submitted draft regulations to other relevant ministries for approval. In addition, the MoH has submitted draft regulations for reforms related to escrow accounts to Parliament for review, to be amended and approved by both houses before being enforced by royal decree. Among proposed changes is a provision requiring developers to hold investment capital in an escrow account during the course of a project. This is to ensure that all such funds are used only for expenses directly related to the project, a move officials say will improve certainty for investors. “Up to now, there has been no formal mechanism for upholding the rights of end-users of real estate developments,” Al Zakwani told OBG. “Investors hesitate to go in on a project when there is uncertainty regarding whether it will be finished without a major hiccup with developers. The new changes will ensure trust between these two groups.”
SOFTWARE UPGRADE: A third initiative aims to bring greater transparency to the sector by requiring brokers to process real estate transactions through software mandated by the MoH. Currently, certain lease or sale agreements are registered through municipalities or regional authorities; under the new system, all real estate transactions must be conducted through the MoH. To facilitate compliance, the ministry will furnish all registered brokers with a programme that can be installed on company systems, serving as an official portal for document registration and information submission, such as sale price and annual rent values. Implementation is targeted for mid-2018. From the resulting database the MoH can then collate and anonymise data to create a real estate index, broken down into market segments, which it will publish at regular intervals. This will provide reliable industry-wide data to help stakeholders make informed decisions.
AFFORDABLE HOUSING: The fourth focus is a pilot project to build affordable housing for Omanis as part of their entitlement to land from the state. “Many Omanis who received land grants have been unable or unwilling to build because there were no amenities or community nearby,” Al Zakwani told OBG. “Our idea was, why not offer ready-built communities where we can sell them accommodation, deducting the value of their land grant?” The first such project is to begin construction in 2018 in Barka, where 350,000 sq metres have been allocated. In May 2017 the MoH and the Supreme Council for Planning issued a request for proposals to invest in, develop and manage the project, with submissions closing in June. It intends to announce a developer in early 2018 and break ground six months later. It is hoped that this programme will stimulate the market and reduce the backlog of land grant applications, which stood at 400,000 in May 2017, according to Sheikh Saif bin Mohammed Al Shabibi, the minister of housing.
