Oman’s construction and real estate sectors are growing at a rapid pace, owing to government investment in housing to meet the needs of a growing population and greater foreign investment in mixed-use developments. The construction sector is responding to the needs of the real estate industry, as well as government efforts to promote industrialisation. The latter strategy is in line with Oman Vision 2040, the national on economic diversification, with an emphasis on developing sectors such as manufacturing.
The development of free zones has encouraged greater foreign investment throughout Oman, a trend that has been supported by housing and real estate reforms permitting the foreign ownership of properties. The government’s plans for sustainable development and industrial cities – efforts that are expected to attract higher numbers of foreign residents and tourists to Oman – are also encouraging private sector participation in major construction projects across the country.
Structure & Oversight
The Ministry of Housing and Urban Planning (MHUP) is the government office responsible for managing Oman’s construction and real estate sectors. The MHUP is tasked with allocating land, developing comprehensive urban plans, regulating players and developments in the sector, and implementing social housing programmes.
Construction and real estate are highlighted as vital sectors for the country’s economic diversification In the Oman Vision 2040 development strategy, beyond oil and gas. Strengthening the construction industry will be key to the establishment of special economic zones, which the government sees as key to successfully attracting foreign investment.
The MHUP has announced several transformative initiatives since the launch of Oman Vision 2040 in 2021. These include the Integrated Tourism Complex (ITC) and two key programmes: the Future Cities initiative and the Integrated Housing Complexes programme. The Future Cities initiative aims to develop a number of innovative and sustainable cities, including Sultan Haitham City, A’ Thuraya City and Salalah Future City. The cities have been designed to meet the needs of Oman’s growing population using sustainable development practices and providing a mix of mixed-use accommodations within walking distance of various public amenities.
The Integrated Housing Complexes programme aims to develop new neighbourhoods with mixeduse residential houses and apartments. It will support urbanisation beyond the capital of Muscat with projects planned in the governorates of Musandam, Dhofar, Al Sharqiyah South, Al Sharqiyah North, Al Batinah North and Al Batinah South.
Planning & Growth
The government has also launched the Greater Muscat Structure Plan aimed at accommodating population growth, attracting investment and enhancing connectivity through new transport systems. The plan outlines the development of a 1360-sq-km metropolitan region extending from Yiti to the coastal city of Barka by 2040.
The Oman National Spatial Strategy (ONSS), approved in 2021, is the general framework for directing urban growth over the following 20 years. It responds to objectives outlined in Oman Vision 2040 and the UN’s Sustainable Development Goals 2030. It aims to make cities more competitive and capable of adapting to challenges. The government strives to encourage the urbanisation of several governorates, attract Omanis and foreigners, boost the economy outside of Muscat – including in the areas of Al Buraimi, Ibri, Ibra, Ar Rustaq, Sur, Haima and Khasab – and provide new job opportunities. It also stresses the importance of sustainable development.
The ONSS also establishes national planning standards, which provide the basis for all future land use planning and development. The strategy also created the Oman Planning Information System, a tool to enhance digitalisation in the sector. The ONSS will be implemented through five-year development plans.
New Legislation
In 2024 the MHUP began developing a new Real Estate Regulatory Law to unify regulations on real estate development, brokerage, evaluation, owners’ associations and escrow accounts under a single legal system.
The Shura Council’s Social Affairs, Labour and Housing Committee assessed the draft law at the beginning of 2025. The committee discussed with the MHUP mechanisms and criteria for granting developers ownership, the handling of delays and project failures, the creation of a committee to provide oversight of real estate projects, and the potential creation of a real estate stock exchange. It also raised the fact that the law does not include the mandatory or incentivised use of renewable energy or sustainable building materials, which it found surprising given the aims for sustainable development outlined in Oman Vision 2040. The committee also stressed the need for a green building code.
The government has sought to encourage greater investment in construction and real estate in recent years through the launch of the Foreign Capital Investment Law (FCIL) that allows the foreign ownership of investment projects. Since 2023 foreigners have been permitted to own property in specific areas known as ITCs, which are developments established to promote investment and tourism. Some ITCs include Al Mouj Muscat, Muscat Hills, Jebel Sifah, Salalah Beach and Sultan Haitham City.
The legal reforms also introduced long-term residency permits for property investors, meaning that foreigners who purchase properties with a value of OR250,000 ($650,000) or more are eligible for residency. Owners must pay the standard 3% property registration fee, as well as municipal taxes.
Codes & Zoning
Building standards in Oman have improved in recent years. To enhance safety further, in March 2024 the MHUP signed a contract with the International Code Council for the development of six comprehensive building codes aimed at enhancing building safety and construction standards. The codes, tailored to the local context, are expected to be finalized by early 2026.
There is a comprehensive zoning system in Oman, covering residential, commercial, industrial and agricultural zones. Constriction permits align with zoning regulations, safety standards and building codes.
Several challenges remain for developers, such as Oman’s complex administrative processes, which often contribute to bureaucratic delays. There are several conflicting regulations, which means developers regularly experience inconsistencies between local, regional and national guidelines. In addition, the rapid pace of urbanisation means that existing zoning regulations quickly become outdated.
Size & Performance
The construction industry in Oman was expected to reach a value of OR3.9bn ($10.1bn) in 2024 and see a compound annual growth rate (CAGR) of 6.8% between 2024 and 2028, reaching around OR4.4bn ($11.4bn) by the end of that period. The industry’s growth has been supported by higher levels of foreign direct investment (FDI), particularly in the manufacturing sector. FDI in manufacturing increased by 41% year-on-year in the first half of 2024, after an annual decline of 6.4% in 2023, according to the National Centre for Statistical Information (NCSI).
The construction sector is expected to continue its expansion as the government invests heavily in renewable energy, transport infrastructure and housing, in line with Oman Vision 2040. In 2024 the Ministry of Transport, Communications and IT announced it awarded seven transport infrastructure projects valued at a combined OR119m ($309.3m), to be completed by the end of 2027.
“The construction sector continues to benefit from government initiatives tied to Oman Vision 2040, which prioritises sustainable urbanisation and industrial expansion,” Thomas Alexander, CEO of Al Adrak Trading & Contracting, told OBG. “With the right balance of innovation and resource management, the construction industry can remain a vital driver of the nation’s economic diversification.”
The real estate market is expected to reach a value of $4.8bn in 2025 and $7.4bn by 2030, growing at a CAGR of 9.2%. Expatriates account for approximately 40% of Oman’s population and, following the introduction of the FCIL, the segment is expected to drive real estate demand. Nonetheless, there is an oversupply of properties in Oman’s housing market, most notably in Muscat, where around 87,000 residential units are unoccupied, marking approximately 20% of the total residential supply. This has forced housing prices down by between 10% and 15% for apartments and 15% and 25% for villas.
The villas and houses category is Oman’s most popular residential segment, holding approximately 66% of the market share in 2024. However, the condominiums and apartments market is undergoing significant growth as developers strive to meet the needs of the country’s growing population. The segment is expected to grow by around 7% between 2024 and 2029 as the country undergoes greater urbanisation and demand for affordable residential properties continues to increase.
The government’s ambitious urban development plans are expected to reshape the sultanate’s residential offerings. The construction of Future Cities and Muscat’s expansion will address the housing needs of a growing population, as well as encourage the sustainable development of mixed-used buildings in the new communities. For example, the MHUP plans to eventually accommodate some 100,000 residents in Sultan Haitham City.
Luxury Options
In line with plans to expand the tourism sector outlined in Oman Vision 2040, Oman has attracted more private investment in waterfront and ITC developments, expanding the offerings in the premium residential segment. Luxury residential developments such as Al Mouj and Muscat Hills, have seen less of a decline in rental prices, demonstrating more stability in the segment. The MHUP also aims to develop integrated housing projects across multiple governorates. In January 2023 the ministry signed eight new contracts worth OR150m ($389.9m) across Muscat, Al Batinah North and Al Batinah South. The contracts covered the development of thousands of homes and community facilities.
Oman’s real estate market is fragmented, with established local developers and international companies participating. Some major players include Al Taher Group, BBH Group, OMRAN Group, Malik Developments and Shanfari Group. While Omani developers have a strong hold on the market, new real estate policies for foreigners and the establishment of free zones are expected to drive international investment and bring new expertise.
The anticipated influx of expatriates in the decade to 2035 is expected to lead to the diversification of housing options across several regions of Oman. It is also expected to increase the demand for rental properties. Coastal cities are expected to undergo greater urbanisation compared to inland regions, driving up prices. For example, Salalah is expected to become a major tourist hotspot, thanks to significant public and private investment, while Duqm will likely evolve into a regional business centre.
Building Materials
As Oman’s government pursues a strategy of economic diversification, it aims to expand its manufacturing industry significantly in the coming years. This will be supported by the development of free zones and the introduction of incentives for foreign investors. “As Oman diversifies its economy, the construction and engineering sector plays a critical role in enabling new industries and supporting tourism, logistics and manufacturing,” Lorenzo Nicolai, managing director of construction and engineering firm Renardet, told OBG. “Advancements in technology and a focus on environmentally sustainable solutions are shaping the sector’s future.”
The hardware and building materials market has grown rapidly, in line with the expansion of the construction and manufacturing sectors. It is projected to achieve a revenue of around $1.3bn in 2025 and grow at a CAGR of 3.3% between 2025 and 2029. This growth will be driven by an increase in demand for high-quality hardware and building materials as Oman’s construction industry continues to expand.
The Oman Cement Company (OCC), established in 1978, is the main supplier of cement in the sultanate. The company made a profit in 2023 when construction picked up again after a slump during the Covid-19 pandemic. In the first nine months of 2023 OCC produced 2.2m tonnes of clinker and 2.4m tonnes of cement. The company follows a dynamic pricing policy that is adjusted based on the market. OCC plans to establish a new cement plant in the Special Economic Zone at Duqm (SEZAD) in with a capacity of 5000 tonnes of clinker per day, as well as upgrade its Muscat plant to boost capacity. It is also developing a waste-to-energy facility at its Misfah complex with an annual capacity of 3.6m tonnes to decarbonise operations in line with national aims.
Steel accounts for more than 2% of Oman’s GDP, with seven facilities producing iron ore. Exports from Oman’s iron and steel factories totalled around OR687m ($1.8bn) in 2022. As of November 2024 steel plants directly supported 1681 jobs and thousands of indirect positions, with an Omanisation rate of 45%.
There has been an influx of foreign investment in steel in recent years. The partnership between Vale Oman and China’s Jinan Iron and Steel saw the creation of the first iron ore concentration plant in Oman in the Sohar Port and Free Zone. The $624m facility will have the capacity to produce 12.6m tonnes of high-quality iron concentrate products.
The 2024 development of the OR7.5m ($19.5m) Duqm materials market in the SEZAD will enhance the availability of building materials in the region. The market covers 32,000 sq metres and is designed for light and medium industries, offering building materials, electrical appliances, luxury items and Chinese autos. Local firms Al Thabat Holding Company and the Duqm Development Company, and Chinese company Wanfang, developed the market around 10 km from Port of Duqm to facilitate the import and export of building materials and other products.
Major Projects Demand Drivers
As of April 2025 there were over $120bn of active construction projects under development, with $8.7bn worth of projects expected to be completed by 2026. Some of the largest projects include the Aames Bay Development in Musandam, the OR40m ($104m) Rathath Boulevard in the Dhofar Governorate, the OR6.9m ($17.9m) Rimal Park in Al Batinah South and the Madinat Al Irfan business district in Muscat. The government is also investing heavily in the construction of the Oman Rail Network, which will span 2244 km and connect ports and major cities such as Muscat, Sohar and Duqm (see Transport chapter). It is expected to facilitate trade, improve connectivity and promote economic diversification.
Other transport projects include the Muscat Metro, which is expected to be operational between 2030 and 2032. It will run between Sultan Haitham City and Ruwi Central Business District. A detailed feasibility study is expected to be completed in 2025. Meanwhile, the Muscat International Airport expansion will boost connectivity, promote Oman as a regional aviation centre and attract tourists.
Diamond Developers and the Oman Tourism Development Company, in collaboration with Oman-headquartered Sustainable Development and Investment Company (SDIC), are constructing the $1bn Yiti sustainable city. Several large-scale, mixed-use buildings including residences, hotels, schools and recreational facilities have already been developed, with the aim of housing up to 10,000 inhabitants. The government hopes to develop Yiti as the region’s largest operational sustainable community and the first net-zero-emission city in the world by 2040. “Sustainable urban development is becoming a cornerstone of Oman’s economic diversification strategy, driven by initiatives that emphasise renewable energy, efficient resource management and community well-being,” Abdelrahman Elhag, general manager of Oman-headquartered SDIC, told OBG. “While challenges such as cost and public awareness persist, the sector’s potential for innovation and growth remains strong.”
The MHUP hosted the 2024 Urban October Conference and Home and Building Exposition at the Oman Convention and Exhibition Centre, during which a total investment of OR82m ($213.1m) was announced for construction projects. The event focused on promoting development across governorates to encourage greater urbanisation beyond Muscat, spur economic diversification and enhance tourism.
The government of Oman’s Greater Muscat Structure Plan, developed by global architecture and urbanism firm Broadway Malyan, was created to address the fast-growing population and climate change risks such as flooding, as well as support economic diversification. Muscat has evolved to have a linear corridor-like layout, making commuting challenging. It has 14 wadi systems – riverbeds that are mainly dry throughout most of the year but fill with water during the summer rainy season, making the capital susceptible to flooding.
A new metro system will enhance connectivity across the city. The government purchased land along the route to alter the format of the capital and create a new centre. The government plans to regenerate the former business area of Ruwi to attract people from Greater Muscat. It will also establish a no-build zone in the city’s mountain foothills and in its far west to create a “green lung” and restrict construction in flood zones.
Residential Real Estate
Oman’s real estate sector is expanding across several segments, including the residential, leisure, commerce and industrial segments. The government is also financing the expansion of Oman’s affordable housing offerings to support low-income populations.
The government is investing heavily in the residential sector to attract private investment in line with population growth. The first phase of Sultan Haitham City, one of the country’s Future Cities, opened in 2023 and consists of several mixed-use residential buildings. Once complete, it will include 19 integrated residential communities, as well as commercial, health and educational facilities.
Tibiaan Real Estate Company’s OR13.4m ($34.8m) Al Nuha development spans over 58,000 sq metres, comprising 113 residential units and 35 commercial spaces. Al Nuha, which is expected to be complete by 2028, is intended to be ready for the launch of Sultan Haitham City’s Phase One in 2030.
In February 2025 the government unveiled plans for the $1.3bn Al Khuwair Muscat Downtown and Waterfront development by Zaha Hadid Architects. The 3.3m-sq-metre construction will include a residential complex, a marina and a cultural district. Once complete, it will house over 60,000 people. With Muscat’s population expected to increase from 1.5m in 2025 to 2.7m in 2040, the government is encouraging more mixed-use developments that align with the urbanisation aims presented in Oman Vision 2040. Khalfan Saeed Mubarak Al Shueili, the minister of housing and urban planning, stated in April 2024 that the MHUP expects Muscat will require an additional 300,000 to 600,000 homes by 2040 to house its burgeoning population.
Affordable Housing
A lack of affordable housing has been a prominent issue in the past and led Oman’s government to establish the 1973 Social Housing Policy. More recently, in 2020 the government developed an assistance programme that aims to improve the living standards of low-income Omanis by providing adequate housing.
Meanwhile, the MHUP spent OR35m ($90.9m) on the development of affordable housing in 2022, providing housing assistance to 1478 families. This figure rose to OR40m ($103.9m) in 2023 and OR70m ($181.9m) in 2024. This investment contributed to the construction of 747 homes, with 478 housing units under construction and 109 more planned across the country. In addition to building more housing, the MHUP provides grants and loans for vulnerable populations to build or repair their houses.
Mortgages & Housing Finance
While mortgages have been available to local homeowners for decades, in 2023 they were extended to non-Omanis. Moreover, the Central Bank of Oman allows lenders to provide loans to developers to construct residential projects as well as industrial projects. Most banks operating in the country offer mortgage products, which has made the market more competitive in terms of interest rates, maximum loan amounts and loan purposes. Oman offers a similarly wide range of mortgage products to the UAE and Saudi Arabia, although mortgage take up continues to remain lower. This will likely change over time as people become more familiar with the options available, leading more foreigners to apply for mortgages.
The Oman Housing Bank, which was established in 1977, offers financial support for housing and construction projects and purchases. It focuses on the low and medium-income segment, helping Omanis access housing and commercial loans. Several other banks – including the Bank of Beirut in Oman, Bank Muscat and India’s Bank of Baroda – offer mortgages with varying rates and conditions. Bank Nizwa, Oman’s first Islamic bank, offers mortgages based on the principles of sharia.
Oman’s banking sector had approximately OR4bn ($10.4bn) in residential mortgages outstanding as of 2021. The value of mortgage contracts increased by 44.8% year-on-year in the first 11 months of 2024, reaching OR2.1bn ($5.5m), according to the most recent data from the NCSI. However, the number of contracts fell by 12.2%, from 21,461 to 18,846.
Leisure & Retail
An increase in private investment has contributed to the development of several leisure and retail developments in Oman since 2020. The $467.5m Mall of Oman, developed by Majid Al Futtaim Group, opened in the new Madinat Al Irfan central business district in September 2021. Construction on the 145,000-sq-metre mall started in 2014 and it is now the biggest mall in Oman, with 350 stores, including 55 food outlets. In addition, the OR35m ($90.9m) Salalah Gardens Mall opened in 2022 as the first modern mall in the future city of Salalah. It is located in close proximity to Salalah Airport and boasts around 100 international brands covering 55,000 sq metres.
Meanwhile, in 2023 Tibiaan Properties and Al Tamman Real Estate Company signed a contract to develop the OR8m ($20.8m) Ajwaa commercial and leisure project in the Al Saada area of Salalah. The development covers around 20,000 sq metres and includes over 220 new commercial units.
The Bin al Sheikh development company is building The Village in Muscat, a mixed-used space with high-end shops, hotel apartments and a marina. Construction on Zone Three is expected to commence in early 2025, with the development of Zone Four to be scheduled and put in motion shortly thereafter.
Commercial
Several ITCs are being developed in line with Oman Vision 2040’s goal of increasing tourism across the country and supporting economic diversification. Al Mouj Muscat recently awarded Phase Two of the Al Mouj Business Park development to Oman Shapoorji Company, with completion expected in 2026. It consists of three office buildings with underground parking and rooftop gardens; all units in the development have already been sold. It forms part of the Al Mouj Muscat community development, located close to Muscat International Airport, which has residential properties housing over 8000 residents, as well as a marina and a golf course.
Industrial
Oman Vision 2040 highlights the industrial sector as a key driver of sustainable growth and economic diversification. According to the NCSI, Oman’s manufacturing sector grew by 9.2% in the first quarter of 2024 compared to the same period in 2023. It is expected to continue growing significantly over the decade to 2035, thanks to the introduction of more favourable investment policies and the development of Oman’s free zones.
The Public Establishment for Industrial Estates (Madayn) manages and operates several industrial areas. It recently announced the development of five new industrial cities, in addition to the existing nine existing industrial estates, with the target of developing 40 industrial estates by 2040.
As of early 2025 Madayn had commenced works on the industrial city of Suwaiq in the Al Batinah North Governorate. The new industrial city is located between Muscat and Al Batinah North and is close to the Sea of Oman and the Port of Suwaiq, making it well positioned for both imports and exports. The development covers 10m sq metres and will host a number of industries, including food processing, mining, pharmaceuticals, logistics and manufacturing. In addition, in 2024 Madayn signed 16 investment contracts for the Al Buraimi Industrial City worth over OR7.9m ($20.5m). The industrial city covers a combined area of over 165,000 sq metres.
Outlook
The construction and real estate sectors have registered significant growth in recent years, a trend largely attributable to proactive governmental policies that spurred both public and foreign direct investment. The residential housing segment is experiencing rapid expansion, driven by demographic growth and increasingly characterised by the development of mixed-use schemes integrating residential, commercial and amenity spaces.
A key development has been the legislative easing of restrictions on foreign investment in real estate, particularly within ITCs, a move expected to support Oman Vision 2040’s goal of economic diversification through tourism. The resultant upswing in demand across all property segments is set to fuel continued expansion of the construction industry. The establishment of strategic free zones and ongoing investment in transport infrastructure are anticipated to further enhance Oman’s attractiveness as a destination for international businesses.
The burgeoning real estate sector will provide crucial impetus for the growth of the domestic construction industry and the broader manufacturing base. While the overall outlook is favourable, the MHUP is actively addressing localised instances of property oversupply and is working to improve public engagement with new urbanisation programmes promoting development beyond Muscat. These efforts underscore a commitment to balanced regional development and resource allocation. Meanwhile, the rollout of the Greater Muscat Structure Plan is expected to accommodate future population expansion and ensure sustainable urban development.
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