Oman Investment Authority’s latest reforms bode well for tourism and real estate sectors
The Middle East’s economic diversification into non-oil sectors is gathering steam, with nations making critical policy interventions, removing traditional barriers and burying old hatchets. Within the context of non-oil sectors, real estate, agriculture and tourism have emerged as the foremost avenues. And over the course of the pandemic, KSA, UAE and Qatar have made significant headway in boosting these sectors. Recently, in what can be termed as an important addition to these developments, Oman has taken a few consequential measures, to strengthen its real estate and tourism sectors.
The Oman Investment Authority (OIA) has announced(1) the restructuring of its tourism and real estate investments, by transferring the control to Oman Tourism Development Company (OMRAN), which will operate as OIA’s subsidiary. This will enable better distribution of roles and responsibilities between OIC and subsidiaries, bringing more clarity and efficiency in management. Let’s look at the impact this development could have.
Real estate: Creation of an inclusive, investor-friendly ecosystem
The Oman real estate sector had a stellar few years till 2016. But growing protectionism and “Omanisation” led to steady decline, with property prices falling 10–15 percent(2) every year. Increasing exodus of expats, who constituted nearly 90 percent of all workers in Oman, has been detrimental to the migrant-dominated economy. To redress this, Oman is now offering expat ownership of flats, under Usufruct rights, besides increasing “freehold” areas. In addition, the Central Bank of Oman recently increased the Loan-to-Value ratio to 90 percent, for first-time home buyers.
These developments are expected to bring unprecedented dynamism into real estate, with the government estimating the sector to grow by 40 percent(3) in 2021. But this scenario also calls for efficient, secure and transparent transaction channels. And this where the new restructuring reforms come into play. Apex bodies like the Ministry of Housing and Urban Planning (MHUP) and OIA are now better positioned and organized, to facilitate a favourable ecosystem for transactions.
Tourism: Safe reopening and setting up for long-term growth
Dubbed the “Switzerland of the Gulf”, Oman has always been a big draw, in tourism. In fact, the nation welcomed more than 3.5 million tourists in 2019, up 8.14 percent from the previous year. The nation’s long coastline, and rich cultural heritage, represent vast tourism potential. And recognizing this, Oman is ramping up its efforts, as evident in the development of Yeti Sustainable City, a 1.5 million square metres waterfront tourism complex, Alila Hinu, a 5-star complex with integrated villas and hotels, among other service-related activities. Now, with the latest reforms, these developments will come under the purview of OMRAN, which is entrusted to make them more tourist-friendly and attractive.
The move coincides with the Sultanate’s decision to reopen tourism, subject to measures such as COVID-19 tests and mandatory health insurance. Citizens from 103 countries are now eligible to travel to Oman visa-free and vacation for up to 10 days. And taking into account the success that Oman has achieved in tackling the pandemic, this move is timed well to give the tourism sector a head start. If the government’s bet on OMRAN bears fruit, the ambitious target of attracting 21 million tourists by 2035 could become a reality.
Also, OMRAN’s defined involvement in both real estate and tourism could create a synergy that will benefit both the sectors. The ecosystems of both industries are poised for investment, and the additional liquidity could in turn be channeled into the implementation of larger diversification strategies, like the Oman Vision 2040 and the Tenth Five-year Plan. In this context, the government’s latest reforms are both timely and significant.