Oman real estate in 2021
If 2020 was the test of resilience, for economies around the world, 2021 will be a marker for their ‘bounce-backability’. In an October 2020 forecast, the International Monetary Fund had projected a modest recovery for most Middle Eastern nations, in 2021. However, the notable exception was the economy of the Sultanate of Oman, which the international body expected to experience a slight contraction of 0.5%(1).
However, it’s hardly doom and gloom time for Omani economy. The IMF’s projected contraction in size, for the nation’s economy, is small enough to not be a cause for undue alarm. Perhaps far more pertinently, efforts are underway to provide the right stimulus and incentives for key industries to revive their growth. This is probably most evident in the real estate sector, where a slew of initiatives and influencing factors are setting the stage, for what could be a long lasting upward trend.
Leveraging demographics, expatriate ownership, and timely initiatives
The Oman Real Estate Registry recently announced an officially sanctioned Real Estate Valuation which will issue officially sanctioned estimates for real estate pricing, across the governates of the Sultanate. This initiative needs to be seen in the context of usufruct rights for fully foreign owned entities, which were granted in 2017; Oman’s sizable youthful demographic; and new rules for the ownership of flats by expatriates.
In particular, the new regulations, which allow expats to purchase flats priced at OMR 45,000 or higher, with certain caveats that define the age of the buyer and the type of property(2), should create a significant upswing in real estate transactions. The recent launch of Oman’s largest ever REIT, issued by the Capital Market Authority, is an indication that these measures are having the desired effect. In fact, many industry watchers believe that, allowing expatriates to purchase flats in Oman, in conjunction with a large part of the indigenous population approaching the typical age for first home buyers, could pump much needed liquidity into Omani real estate. Given the industry’s highly interdependent nature, and ability to influence several heavy engineering and commodities sectors, this influence is likely to add impetus to the nation’s larger economy as well.
Effective interventions are unlocking new opportunities
In a world proactively seeking investment opportunities and assured returns, which can be hedged against the inflationary pressures unleashed in 2020, the Oman REIT Fund presents a strong case, and is likely to attract funds(3). The officially sanctioned valuations being issued by the Oman Real Estate Registry will go a long way to add transparency to the markets, and reassure prospective investors. A market that has been relatively subdued until now, from dampening influences within the larger economy, inherently produces larger percentage returns, compared to more established markets. Oman can justifiably be seen to be lagging leading GCC economies, in its attempts to diversify beyond a traditional dependence on the Oil and Gas industry. As the global economy reopens for business, the recent proactive measures that the Sultanate of Oman has initiated to stimulate its economy, could lead to stronger returns, than many other regional economies that are already mid-way into their diversification efforts.