MARKET REPORT www.cavendishmaxwell.com
ABOUT Established in 2008, Cavendish Maxwell is one of the largest and most respected property consultancies in the region. An influential partner and trusted advisor to key stakeholders in real estate markets throughout the Middle East and North Africa, we offer a comprehensive range of exceptional property services across a diverse mix of sectors and asset classes. Cavendish Maxwell is a fully certified member firm of the Royal Institution of Chartered Surveyors (RICS), bringing together a world-class team of handpicked property consultants and surveyors, unmatched elsewhere in the region. Our team of highly qualified professionals is trusted by real estate market stakeholders throughout the region, including international and domestic banks, property developers, governments, owners and investors, asset managers and professional services firms. We service a diverse mix of specialist property sectors including retail, offices, hospitality, healthcare, education, industrial and logistics. Cavendish Maxwell also publishes independent reports, prepared to globally accepted standards, for loan security, bank lending, audit, insurance reinstatement, dispute resolution, risk management, debt recovery, performance analysis, purchase and sale advice, and third party reliance purposes.
FOREWORD The Sultanate of Oman appointed a new leader in 2020 after the passing of Sultan Qaboos bin Said, credited with transforming Oman into a prosperous country with a peaceful foreign policy during his 49-year reign. The swift and smooth appointment of his cousin Sultan Haitham bin Tariq as the new ruler sent a clear message to the world about Oman’s intent to maintain transparency and stability. It is now clear that the new Sultan will continue Oman’s foreign policy as outlined by the former ruler, with a focus on maintaining its strategic role as a mediator in the region. Not only will he have to cautiously tackle international affairs, most recently flared with increased tensions between the United States and Iran in the strategically located Gulf of Hormuz, but also respond to domestic challenges such as mounting debt, high unemployment levels and a generally sluggish economy. In our latest report, we explore the effects of these developments on Oman’s real estate sector, reviewing the performance of the residential, retail, office, industrial and hospitality segments in 2019.
CONTENTS 4
Macroeconomic Overview
5
Demographic Overview
6
Real Estate Activity
8
Tourism Overview
10
Residential Market Overview
18
Office Market Overview
22
Retail and Entertainment
26
Hospitality Market Overview
30
Industrial Market Overview
34
Market Spotlight
36
A Word From Our Chief Economist
38
Key Services
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
MACROECONOMIC OVERVIEW
In 2018, hydrocarbon production was a major contributor to Oman’s Gross Domestic Product (GDP), with Central Bank of Oman data showing a contribution of 37%, more than doubling the 2017 levels. According to World Bank data, Oman’s real GDP was estimated to decline to 0.3% in 2019 from 2.2% in 2018. Whilst official figures on growth for the full year are not yet released, one of the drivers of the expected decline in 2019 were the oil production cuts that were put in place by the OPEC+ group of oil-producing countries, including Oman. Whilst the lower contribution by the petroleum sector likely weighed on the economy’s expansion in 2019, the World Bank in its December 2019 update estimated growth to expand to 3.7% in 2020, aided by increased natural gas production from new fields. However, since then, concerns around the Covid-19 outbreak have deepened and the Opec+ deal collapse has exerted downside pressure on oil prices. Meanwhile, Oman’s diversification efforts are underway with the non-oil economy estimated to grow by 1.5% in 2020 aided by the Tanfeedh programme, which focusses on developing sectors such as logistics, tourism, transport, mining, manufacturing and fisheries.
OMAN GDP AT CURRENT PRICES 2015–JUN 2019 3-year CAGR*: 3.6%
30,000
25,000
25,000
*Compound Annual Growth Rate Source: Royal Oman Police; Ministry of Finance; National Centre for Statistics and Information; World Bank Data; Cavendish Maxwell 2020
4
5,000
0
Qatar
UAE
Kuwait Bahrain
6,315
2015 2016 2017 2018 Jan– Jan– Jun18 Jun19
10,000
8,931
14,050
14,325
30,489
0
27,216
27,385
5,000
28,749
10,000
15,000
9,251
15,000
20,000
13,170
Y-o-Y growth: -1.9%
16,542
20,000
GDP per capita (OMR)
30,000
26,550
35,000
GDP at current prices (OMR million)
GDP PER CAPITA IN GCC COUNTRIES 2018
Saudi Arabia
Oman
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
DEMOGRAPHIC OVERVIEW
OMAN POPULATION BY NATIONALITY DECEMBER 2019
According to the National Centre for Statistics and Information (NCSI), the population of Oman stood at 4.7 million as of December 2019 compared to 2.9 million in 2008. In 2019, locals comprised 57.7% of total population whilst expats made up the remaining 42.3%.
57.7%
In an attempt to increase the domestic participation of its labour force, Oman has adopted a phased extension of a temporary visa ban on hiring expats in the professions of IT, accounting and finance, sales and marketing, management and human resources, insurance, media, medical, airports and engineering. Between December 2018 and December 2019 alone, the total expat population in Oman recorded a negative year-on-year (YOY) growth of 2.9%. However, backed by a young local population whose skill-sets are being sharpened through several government initiatives, Oman is set to display its investment value to global investors.
42.3%
TOTAL POPULATION IN OMAN 2008–NOV 2019
4,664,844
4,647,110
4,560,000
4,414,000
4,159,000
3,993,000
3,855,000
3,623,000
3,295,000
2,773,000
3,174,000
10-year CAGR: 3.9%
20%
19%
5,000,000
15%
4,500,000 4,000,000 3,500,000
25%
10%
11%
10% 6%
3,000,000
4%
6% 4%
5%
3% 1%
2,500,000
0.4%
2,000,000
0% -5%
1,500,000 1,000,000
-10%
-13%
500,000
-15%
0 2009
2010
2011
2012
2013
2014
Total population
2015
2016
2017
2018
2019
Y-o-Y growth 5
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
REAL ESTATE ACTIVITY
Supported by the recovery in oil prices until 2019, Oman’s real estate market gradually recovered, presenting several opportunities for owners and tenants alike.
Real estate activity includes sale, grant, inheritance, exchange, mortgage, and mortgage redemption, usufruct and division transactions. According to the NCSI, the value of traded contracts during December 2019 in Oman stood at over OMR 263 million, whilst collected fees amounted to over OMR 7 million. The total value of sale contracts in 2019 stood at over OMR 70.6 million through 4,674 sale transactions. Meanwhile, the total value of mortgage contracts showed an uptick of 13.5% from OMR 1.6 million in December 2018 versus OMR 1.8 million in December 2019 through relatively unchanged contracts. After recording a steep drop to OMR 2.6 billion in 2017 from OMR 6.6 billion in 2016, traded value of property in Oman improved slightly to OMR 2.7 billion in 2019.
6
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
REAL ESTATE ACTIVITY IN OMAN 2017-2018
2019
Key Indicators for Oman’s Real Estate Sector
Oct
Traded value of property (OMR million)
Dec
Total
2018
2019
% Change
216
471
263
950
2,641
2,771
4.9
7
6
7
20
84
82
-2.4
83
60
71
214
1,002
911
-9.1
5,161
3,716
4,674
13,551
58,828
56,887
-3.3
130
410
190
730
1,623
1,837
13.2
1,535
1,118
1,139
3,792
16,027
16,017
-0.1
3
1
2
6
16
23
43.8
164
96
170
430
1,527
1,641
7.5
18,895
14,513
18,209
51,617
223,492
211,191
-5.5
89
58
37
184
1,396
875
-37.3
Fees collected for all legal documents (OMR million) Traded value of sales contracts (OMR million) Number of sales contracts Traded value of mortgage contracts (OMR million) Number of mortgage contracts Traded value of barter contracts (OMR million) Number of barter contracts Number of properties issued
Nov
End of Dec
Number of properties issued for GCC nationals
2,771
2,641
2,609
7,000
6,622
TRADED VALUE OF THE PROPERTY IN OMAN DECEMBER 2016–2019
10% 5%
6,000
0%
0%
1%
-10%
5,000
-20% 4,000 -30% 3,000 -40% 2,000
-50%
1,000
0
-60%
-61%
2016
2017
Traded value of property (OMR million)
2018
2019
-70%
Y-o-Y growth 7
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
TOURISM OVERVIEW
As part of its diversification strategy, Oman is focusing on its tourism industry as a key growth driver of the economy. Tourism contributed 2.8% to Oman’s GDP in 2016. In the same year the government launched the Oman Tourism Strategy (2016 -2040)زز. The strategy aims to boost the share of the sector’s contribution to GDP to 6-10% by 2040, attracting 11 million local and international tourists, and creating over 500,000 jobs through an investment of OMR 19 billion. In 2018, tourism contributed 2.9% to Oman’s GDP. Total tourism revenue in Oman stood at OMR 1.4 billion of which inbound tourists contributed 49% at OMR 680 million. The remaining 51% at OMR 700 million was derived from domestic tourism. According to NCSI data, the number of visitors to Oman has increased over the last five years, from 1.9 million in 2013 to 3.2 million in 2018 registering a positive CAGR of 11%. Compared to 2017, the number of visitors coming to Oman recorded a year-on-year growth of 2%. In 2019, Oman welcomed 3.5 million visitors. Visitors from GCC countries made up the highest share at 45%, followed by Asians at 21% and Europeans at 19%. Of the 2.3 million overnight visitors, 1.5 million stayed in hotels and hotel apartments, 484,000 with relatives and friends, whilst the remaining stayed in furnished flats and other accommodation. Visitors spent a total of OMR 679.2 million of which accommodation represented the bulk of expenses at 31%. Accommodation spending reached OMR 213 million in 2018 compared to OMR 183 million in 2017, registering a year-on-year increase of 15.6%. Apart from increasing contribution towards GDP and generating employment opportunities, Oman’s push for tourism is expected to support 1,200 tourism SMEs and stimulate the overall local economy, readying it for future growth.
8
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
NUMBER OF VISITORS TO OMAN 2013–2018
1,922,000
2,225,000
2,635,000
3,207,000
3,179,000
3,241,000
5-year CAGR: 11%
2013
2014
2015
2016
2017
2018
GCC
Other Arabs
3,500,000
Number of visitors
3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0
NUMBER OF VISITORS TO OMAN BY PURPOSE OF VISIT 2018
Asians
Europeans
Others
NUMBER OF VISITORS TO OMAN BY TYPE 2018
2,500,000
32%
1,500,000 1,000,000 500,000
Leisure and recreation
Business
Visiting relatives and friends
Others
0
941,000
46%
2,000,000
2,301,000
11%
Number of visitors
11%
Overnight visitors
Same-day visitors
9
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
RESIDENTIAL MARKET OVERVIEW
As Oman pushes ahead with its Omanisation drive, the number of expats leaving the country as a result of visa bans for foreign workers has increased, sending property rents and prices lower.
NCSI data showed that between December 2018 and 2019, the total number of expats decreased 2.9% from 2,030,194 to 1,972,088. To adjust to the changing market scenario, some landlords and owners have lowered their asking rents and prices, whilst offering better maintenance services. Consequently, they are witnessing lower vacancies, compared with others who are less flexible or have poorly maintained properties. With increased availability, tenants and buyers are preferring to move to certain areas of Muscat and other cities.
10
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
11
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
RESIDENTIAL PRICE PERFORMANCE
OMR 105,000
OMR 187,500
OMR 142,000
OMR 297,500
OMR 150,000
OMR 440,000
PRICE BY UNIT TYPE 2019
OMR 486,000
APARTMENT
OMR 780,000
VILLA/TOWNHOUSE
1 BR
2 BR
2 BR
3 BR
3 BR
4 BR
4 BR
5 BR 6 BR
OMR 100,000 OMR 120,000
OMR 25,000
OMR 75,000
Al Mouj Al Khoudh Ma’abela
12
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
OMR 74,000
OMR 222,000
OMR 48,000
OMR 88,000
OMR 245,000
OMR 55,000 OMR 70,000
OMR 220,000 OMR 240,000 OMR 73,000
OMR 240,000
OMR 108,000
OMR 371,000
OMR 135,000
OMR 558,000
OMR 210,000
OMR 695,000
OMR 380,000
OMR 303,000 OMR 352,000 OMR 463,000
OMR 50,000
OMR 130,000 OMR 180,000 Qurm
OMR 270,000 OMR 345,000
Shatti Al Qurm
Al Khuwair
Madinat Al Sultan Qaboos
Azaiba
OMR 38,000 OMR 50,000 OMR 79,000 Muscat Hills Bausher
13
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
RESIDENTIAL RENT PERFORMANCE
OMR 500
OMR 790
OMR 700
OMR 1,200
OMR 900
OMR 1,300 OMR 1,700
MONTHLY RENT BY UNIT TYPE 2019 APARTMENT
VILLA/TOWNHOUSE
1 BR
2 BR
OMR 160
OMR 350
2 BR
3 BR
OMR 170
OMR 480
3 BR
4 BR
OMR 240
OMR 520
5 BR 6 BR
Al Mouj Al Hail Al Khoudh Ma’abela
OMR 125
OMR 250
OMR 175
OMR 150
OMR 350
OMR 200
OMR 200
14
OMR 300
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
OMR 230
OMR 550
OMR 165
OMR 400
OMR 300
OMR 680
OMR 195
OMR 490
OMR 425
OMR 950
OMR 230
OMR 600
OMR 235
OMR 500
OMR 230
OMR 500
OMR 280
OMR 610
OMR 410
OMR 700
OMR 365
OMR 830
OMR 375
OMR 800 OMR 900
OMR 860 OMR1,000
OMR 1,200 OMR 1,500
Qurm
OMR 2,200
Ruwi
Shatti Al Qurm
Al Khuwair Madinat Al Sultan Qaboos
Azaiba
OMR 850 OMR 1,100 OMR 1,450 OMR 1,800
Muscat Hills
Bausher
OMR 235
OMR 500
OMR 295
OMR 600
OMR 305
OMR 500
OMR 315
OMR 700
OMR 400
OMR 650
OMR 720
OMR 760
OMR 850
OMR 1,000
15
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
RESIDENTIAL UPCOMING SUPPLY Oman is expected to receive additional supply of residential properties during 2020-2021. Some of the new developments include Habitat in Al Khuwair with 44 residential units, 44 retail units and 118 office units, The Myriad Muscat with 1,476 units and Al Hail Green Residential Development - Phase 2 containing 360 units.
Al Hail Green Residential Development - Phase 2
Musandam
Seeb
Khasab
Seven blocks consisting G+5 buildings with 168 3-bed units. Five blocks consisting G+7 buildings with 192 2-bed units. Parking capacity for 440 cars.
Al Batina
Al Buraimi
Suhail Bahwan Group 2020 360
Ad Dhahirah
BBH Towers - Airport Heights Near Muscat International Airport Four G+8 residential towers. Development consists of a small mall, gym, swimming pool, children’s rest area and a hanging garden. Private Developer 2020
Oceana Luxury Sea Apartments Muscat Apartment size ranges between 65 and 161 sq m. Apartment price to range between OMR 37,000 and OMR 92,000. Arabian Properties 2020 180
Duqm Frontier Town: Phase 2 A
The Myriad Muscat Seeb Student-housing complex designed to accommodate over 2,500 residents. Includes a supermarket, retail stores, food outlets and a fitness club. Sandan Development and Strategic Housing Group (SHG) 2021 1,476
Al Muna Gardens Bausher Highlands OMR 22 million development consisting 3-4 bed villas. Apart from retail and entertainment areas, it will have a nursery for children and commercial spaces for rent. Zain Properties 2021 122
Duqm Second phase of the larger project of the construction of mixed-use facilities on 270 ha of land. Includes the development of commercial space, retail areas, a hospital, a shopping mall and an international school. Duqm Development Company 2020 500
16
The Residences at Mandarin Oriental Muscat First high-end branded residence in Oman with apartment sizes ranging from 75 to 260 sq m. Eagle Hills Muscat 2021 155
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
Muscat
Integrated Residential Complex in Oman Bausher Ash Sharqiyah
Rimal 2 to be spread across 44,000 sq m offering 1-3 bed apartments. Starting price of apartments is OMR 38,995 and commercial units are available from OMR 27,995. Oman Supreme Council for Planning 2021 148
Ad Dakhiliya
Habitat in Al Khuwair Al Khuwair The 75,000 sq m project is a mix of for-sale residential, commercial, and open-air restaurants anchored with unique retail spaces. Al Wusta
The residential units are spread between 97 and 322 sq m whilst the office units are between 58 and 295 sq m. Tasmim 2021 44
Ras Al Hamra Residential Development Project (Phase 5) Ras Al Hamra The 281-ha RAHDP masterplan is divided into five phases. Once complete, the development will have 1,067 units to accommodate 4,000-5,000 employees of Petroleum Development Oman (PDO) and their families. Dhofar
Petroleum Development Oman (PDO) 2022 800
Madinat Al Irfan (Masterplan) Muscat Mixed-use community spans over 4.5 million sq m. Consists 100,000 sq m of retail and 700,000 sq m of office space apart from residences. Oman Tourism Development Company (Omran) 2021 More than 11,000 residential units Developer
Expected completion year
Number of units 17
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
OFFICE MARKET OVERVIEW
Against the backdrop of the tepid economic environment combined with Oman’s protectionist policies, a number of enterprises have found it difficult to sustain. According to Invest Easy, a Ministry of Commerce and Industry (MOCI) platform established for the quick and easy set up of companies, between 2016 and 2019, the total number of registered enterprises decreased from 38,070 in 2016 to 21,913 enterprises in 2019, recording a negative CAGR of 17%. However, compared to 21,235 enterprises in 2018, the number increased in 2019, registering a year-on-year growth of 3%. Interestingly, the small and medium enterprises sector has thrived over the years, with the number of SMEs registered in the Riyada Public Authority of Small and Medium Enterprise Development growing nearly 15% from 36,821 enterprises in 2018 to 42,163 enterprises in 2019. To meet demand from this segment and the overall need for low-cost commercial space, flexible workspace providers and coworking companies are responding with the opening of new or additional business centres. In 2019, leading global workspace provider Regus announced the opening of its sixth business centre in Omanز. In November 2019 the government also introduced the Foreign Capital Investment Law to incentivise investments from foreign players into Oman to stimulate local growth. Implemented in January this year, the law will ensure more money stays within the local economy, which would be utilised to enhance the economy and the people’s standard of living.
OFFICE RENTS IN MUSCAT (PER SQ M PER MONTH)
Seeb/Airport Heights OMR 4-8
18
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
NUMBER OF REGISTERED ENTERPRISES IN OMAN 2016-2019
21,913
21,235
25,569
38,070
3-year CAGR: -17%
40,000 35,000
5%
3%
0%
0% -5%
30,000
-10%
25,000
-15%
-17%
20,000
-20%
15,000
-25%
10,000
-30%
-33%
-35%
5,000
2016
2017
2018
Number of registered enterprises
2019 Y-o-Y growth
Qurm OMR 5-8
Shatti Al Qurm OMR 5-10
Ruwi/Wattaya OMR 2-4
Azaiba
Ghubrah
OMR 4-8
OMR 4-9
Al Khuwair/Bausher OMR 4-7
Ghala OMR 4-7
19
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
OFFICE UPCOMING SUPPLY
iTower Office Building Bausher Seven-storey tower 17,454 sq m development Gulf Muscat United 2020 71 offices sized between 42 sq m and 1,550 sq m
Muscat Hills : Business Tower One Muscat Seven-storey tower with 3 basement levels 32,000 sq m land area and 2,000 sq m build up area Muscat Golf Course Project Company 2020 Spaces ranging from 70 sq m to 500 sq m
Taj Office Building Ghala 12-storey solar-powered project Built up area at 3,942 sq m Teejan Investment and Development Company 2020-2021 3,942 sq m
Integrated Light Industries City (Masterplan) Muscat Sandan City - the first integrated city for light industries in Oman Plot size 250,000 sq m and built up area 320,000 sq m Over 2,400 shops, 400 offices and 1,800 residential units Muscat Golf Course Project Company 2020 2000 sq m land area and 2000 sq m build up area
2021
Developer 20
Expected completion year
Area
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
21
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
RETAIL AND ENTERTAINMENT MARKET OVERVIEW
Oman’s retail sector may currently be under pressure with rapid construction of new malls across the country. adding further pressure on the supply side. However, over the longer term, innovative retail concepts and online shopping are expected to drive growth in the sector. Similar to trends in other regional markets, e-commerce continues to grow at a rapid pace, despite in-store retail dominating the landscape. One of the highest mobile penetration rates in the world coupled with a growing youth population that is tech-savvy has helped enhance the popularity and growth potential of online retail. With an aim to expand offerings beyond traditional retail, some malls are introducing entertainment facilities to cater to the evolving needs of visitors. An example is the Oman Aquarium which opened up in the Mall of Muscat in 2019. With over 30,000 marine animals and 1,000 types of fish spread over three floors, it is the largest aquarium in the Middle East. To provide visitors and shoppers with a unique shopping experience in Muscat, Oman has planned night markets in at least four areas of the capital – Muttrah, Seeb, Bausher and Al Amerat. The move was aimed to re-ignite business activity in these locations, whilst providing growth opportunities to SMEs and employment opportunities for Omanis. An upcoming project to watch out for is the Village Square in Muscat Bay. Extending over 1,640 sq m, the new Village Square will include facilities such as restaurants, cafes, a supermarket, a gym and retail stores. The development is expected to be completed this year.
22
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
RETAIL RENTS IN MUSCAT (PER SQ M PER MONTH)
Ma’abela
Seeb
Al Khoudh
OMR 4-7
OMR 8-15
OMR 9-15
Mawaleh South OMR 9-16
Shatti Al Qurm OMR 10-20
Qurm OMR 10-20
Ruwi OMR 6-10
Bausher OMR 8-12
23
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
RETAIL AND ENTERTAINMENT UPCOMING SUPPLY
Barka Marina Barka Phase 1: Fish, meat and vegetable market, management centre, cold stores, hypermarkets, healthcare clinic, closed and open recreational facilities. Stage 2: Event and family entertainment hall, shopping mall and cinema halls. Stage 3: Hotel and private beach, resort, residential units, marina for 80 yachts, water sports centre. Al Siyabi Stage 1 and 2 - 2020 | Stage 3 - 2022
Mina Al Sultan Qaboos (Phase 1) Sultan Qaboos Port, Muscat Integrated mixed-use waterfront destination to include business and residential zones, a destination mall, six hotels, recreation facilities and docking facilities for cruise liners and yachts. Omran and DAMAC International 2020
Oman Renaissance Museum Nizwa Design includes three interconnected elements: the Plinth, containing the museum’s facilities; the Gardens, a series of hidden oasis and the Jewel Box, containing the museum’s main galleries. Oman Royal Court Affairs 2020
24
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
Muscat Bay’s Village Square Muscat Bay Restaurants, cafes, retail stores, supermarket, gym and parking capacity for 81 cars. Saraya Holdings and Omran 2020
Mall of Oman Muscat 145,000 sq m of retail space with 350 outlets, Oman’s largest Vox Cinemas, Magic Planet family entertainment centre, Carrefour hypermarket and the largest indoor snow park in the country. Majid Al Futtaim 2021
Hayy Al Sharq Barka Mixed-use development including three hotels, retail and residential areas, an integrated theme park, wildlife park, water park, an equestrian center and an edutainment centre. National Development and Investment Company (ASAAS) 2022
Developer
Expected completion year
25
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
HOSPITALITY MARKET OVERVIEW
According to Omran, the executive arm of the government for tourism development, the country’s hotel capacity has expanded over 80% in just under a decade in order to accommodate a thriving tourism and hospitality industry.
Visitor numbers have displayed stable growth from 3 million in 2016 to 3.3 million in 2017 and 2018. With 2.3 million of these being overnight visitors in 2018, Oman is preparing to offer plenty of hotel supply across categories to cater to the varied needs of tourists. Oman also secured the 58th place among 140 nations in the 2019 Global Travel and Tourism Competitiveness Report by the World Economic Forum, moving up eight spots from the previous ranking achieved in 2017. The biennial study measures the factors and policies that enable the sustainable development of the sector, and thereby the wider economy. As of December 2019, total occupancy rates in 3-5 star-hotels was 65.8% compared to 66.1% in December 2018 showing a slight decrease. However, during the same period revenues rose 6.5% from OMR 25.7 million in December 2018 to OMR 27.4 million in December 2019. As of 2018, hotel establishments in Oman stood at approximately 412 including 23 hotels in the 5-star category. According to Oman’s Ministry of Tourism (MoT), 31 hotels were expected to open in the country in 2019, adding a total of 3,264 rooms to the market.
HOTEL GUESTS IN OMAN BY NATIONALITY AS OF DECEMBER 2019 Americans 4%
Oceanian 1%
Other Arabs 3%
Africans 1%
Others 4% GCC Nationals 9%
183,870
Europeans 37%
Asians 14%
Omaniسسs 27% 26
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
27
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
HOSPITALITY UPCOMING SUPPLY
Al Mouj Rayhaan by Rotana Al Mouj, Muscat Accommodation ranges from luxurious rooms and suites to hotel apartments.
Aloft Hotel Near Muscat International Airport Hotel will introduce Aloft brand to Oman and help meet the demand for infrastructure development.
Golden Group Holding and Rotana
New Rotana Enterprises
2021
2020
251
204
Swiss-Belinn Muscat
Studio M Boutique Hotel
Azaiba
Seeb
3-star hotel near Muscat International Airport offering an all-day-dining restaurant, meeting space, gym, Wi-Fi access and 24-hour room service.
Muscat Shaden is Millennium Hotels and Resorts’ first Studio M property in Oman. Located in Al Hail District, the hotel will be spread across six floors.
Al Salaam International Hotel
Al Madina Real Estate
2020
2020
128
302
Mandarin Oriental Hotel
Avani Muscat Hotel
Shatti Al Qurm
Seeb
Featuring five restaurants and bars, the Spa at Mandarin Oriental and an outdoor swimming pool.
To be built over two phases and will include an all-day dining restaurant, Avani Pantry, rooftop lounge, eight meeting rooms, 1,000 sq m ballroom, swimming pool and health club.
Eagle Hills Muscat 2021 150 rooms and suites | 156 residences
Minor Hotels and Safari International Group 2020 160 rooms and suites | 90 serviced apartments
28
OMAN
First InterCityHotel
PROPERTY MARKET REPORT 2O19–2O2O
Jumeirah Muscat Bay
Al Khuwair
Bandar Jissah
Rooms set across six floors along with a restaurant and bar.
Talise Spa, bars, restaurants, conference and banquet facilities, dive centre, watersports and kids club.
Deutsche Hospitality 2020
Jumeirah Group
285
2020 206
Marriott St Regis Al Mouj Corporate facilities, restaurants, VIP lounge, business centre, deluxe wellness centre, spas and health club.
Dhabab Resort Qurayat Two swimming pools, spa, playground and multi-use halls with a capacity of 120 guests per room.
Marriott International
Oman’s Ministry of Tourism
2022
2020
271 luxury rooms | 170 branded residences
Developer
Expected completion year
92
Number of keys
29
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
INDUSTRIAL MARKET OVERVIEW
Compared to 2018, the total number of businesses in industrial estates such as Al Rusayl, Suhar, Raysut, Sur, Nizwa, Buraimi and Al Mazunah recorded yearly growth ranging from 4% in Raysut to over 100% in Al Mazunah. The Public Establishment for Industrial Estates - Madayn, which manages and operates the industrial cities, also recorded 60% completion of the construction of Phase 2 of Al Mazunah Free Zone. The establishment was set up with the intention to develop and position Oman as a leading regional centre for manufacturing, ICT, innovation and entrepreneurship excellence.
INDUSTRIAL ESTATE DISTRIBUTION Total sq m rented and available by governorate
Al Rusayl Industrial Estate Al Rusayl OMR 1* 10,859,175 4,217,296 1,736,100 309
Raysut Industrial Estate Raysut OMR 1* 3,810,479 2,890,186 217,822 202
Suhar
Sur Industrial Estate Sur OMR 1* 36,100,000 6,657,386 17,003,814 134
OMR 1* 21,237,225​ 10,906,748 5,844,506 354
Buraimi Industrial Estate
Nizwa Industrial Estate
Buraimi
Nizwa
OMR 1* 5,561,156 2,019,794 2,676,871 461
OMR 1* 3,111,295 2,026,851 551,426 141
Rent per sq m per annum
Total area sq m
Area available for investment/lease sq m
*
Rented area sq m
Number of exisiting businesses
Common Area Maintenance service is provided
30
Suhar Industrial Estate
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
To attract and retain investors, Madayn provides incentives including exemption from tax on net profit for a period of five years for industrial projects; exemption from customs duties and taxes on production inputs; provision of developed and equipped lands with basic services; 24/7 operation possibility in Madayn’s cities; cooperation from government bodies through Masar Investment Window; lease period of lands and facilities for up to 30 years, renewable for the same period; right to sell and lease the buildings on the leased land and the right to involve new partners in the lease contract, among others. Recently, the Sohar Port and Freezone, which is among the four freezones in Oman marked 15 years of service. Nearly 62% of Oman’s total imports entered through the port and freezone in 2017, alongside 42% of the country’s exported volumes. In the same year, it also contributed to 4.8% of Oman’s total GDP.
Al Mazunah Industrial Estate
Knowledge Oasis Muscat
Mazunah
Knowledge Oasis Muscat
Shops and land available for rent. Rent ranges from 250 bissa to OMR 3 per sq m.
OMR 7–9 778,602
15,362,305
Office: 44,109 sq m Lease contracts for office spaces last for three renewable years
3,239,286 760,714 236
Samail Industrial Estate Samail
Land: 304,284 sq m Land contracts last for 30 renewable years 208
OMR 1* 7,674,457 2,665,508 1,819,398 166
31
OMAN
INDUSTRIAL UPCOMING SUPPLY
Al Hadeetha Copper Mining & Copper Concentrated Plant (Masterplan) Nizwa Sinaw highway, 160 km from Muscat Al Hadeetha Investments and Al Tasnim Infrastructure Services 2019 OMR 27 million
Duqm Power and Desalination Plant Duqm Special Economic Zone, Duqm Oman Oil Company and Gulf Pacific Holding Company Initial phase in 2020 OMR 185 million
Oman - Qatar Bus Assembly Project Sezad Karwa Motors 2020 OMR 104 million across all phases
Khazaen Economic City (Phase 1) Barka Phase 1 to include the first dry port in Oman, a free zone, and logistics and industrial complexes. Oman Global Logistics Group 2020 First contract worth OMR 9.2 million awarded for infrastructure works
Gabbro Quarries Development Project Khatmat Milaha Qatar Primary Materials Company 2021
Duqm Refinery Project (Masterplan) Duqm Primarily designed to produce and recover naphtha, jet fuel, diesel, and LPG, the Duqm refinery will include units for hydrocracking, hydrotreating, delayed coking, sulfur recovery, hydrogen generation and Merox treating. Duqm Refinery and Petrochemical Industries Company 2020–2021 OMR 3.5 billion
Developer 32
Expected completion year
Investment
PROPERTY MARKET REPORT 2O19–2O2O
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
33
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
MARKET SPOTLIGHT
From a small fishing settlement to an industrial oil town The Special Economic Zone Authority (SEZAD) manages, regulates, and develops all economic activities in Duqm. It plans, designs, and implements long-term strategies for infrastructural development and attracts investments to promote a wide spectrum of economic activities.
Musandam Khasab
Al Buraimi
Key among development plans in Duqm is utilising its strategic location not only for economic activity but to also increase tourism within the area. Duqm boasts beautiful beaches and moderate weather and SEZAD has taken numerous initiatives to spur tourism investments. In 2019, SEZAD was granted powers of “Authority for Electricity Regulation” and will regulate electricity and water.
Total Area (SEZAD): 2,000 sq km (the biggest economic zone in the Middle East) Available Units: Residential, commercial, industrial, free-zone (SEZAD)
Development
Unit type
No. of BDR
No. of units
Monthly rent range (OMR) Minimum
Duqm Frontier Town Say Village
34
Al Batina
Maximum
Apartment
1
250
660
660
Townhouse
3, 4
94
1,600
1,640
Apartment
1,2,3,4
20-40 per building
200
500
Villa
3,4
170
350
500
OMAN
Private sector organisations contributed over OMR 5.4 billion to projects in Duqm during 2018. Numerous projects in Duqm have moved to construction phase securing Oman’s non-oil future. Renaissance Village, a key project, is self-sufficient and can house up to 16,200 workers.
PROPERTY MARKET REPORT 2O19–2O2O
DUQM UPCOMING SUPPLY Little India ITC 600,000 leasable
Population projected to increase drastically with the development of large industrial, commercial and residential projects. In 2004 the Duqm International Airport was established offering direct services with Oman Air to Muscat. Plans are underway to develop a railway network— Oman Mineral Railway Plan—connecting different regions including SEZAD
2030-2035 OMR 288 million
Oman Wanfang LLC 40,000 2035 OMR 390 million
Al Madina Real Estate Company 741,000 Not Decided
Muscat
OMR 283 million
Ash Sharqiyah
Al -Hassad Investment Fund Under construction
Ad Dakhiliya Ad Dhahirah
Al Wusta
Dhofar
Total area (sq m) Expected completion year Estimated Investment
35
OMAN
PROPERTY MARKET REPORT 2O19–2O2O
A WORD FROM OUR
CHIEF ECONOMIST Astute Omani real estate investors are focused now on the answers to four important questions. First, what is the correlation between economic diversification and current real estate performance? Macro-economic indicators— growth in particular—are likely to turn in less impressive results in the short-term when a government pursues diversification from hydrocarbons into other industries, especially if this is combined with an emphasis on readjusting local labour markets away from JULIAN ROCHE dependence on expatriates. This applies even to industries that have CHIEF ECONOMIST regional comparative advantage, such as tourism, where Oman has a head start. The evidence from the Omani market, judging from cautious recent revival, is that this reset has now been thoroughly priced in, with the market returning to fundamental trends, hence the recovery in transaction volumes and even residential prices in some districts last year. The actual impact of diversification, however, is yet to be experienced. We could call these three phases together the Tanfeedh effect. Second, what will be the short-term impact of major long-term development projects? Khazaen Economic City, Mina Al Sultan Qaboos Waterfront and the Quriyat ITC Project – all of these have a development timeframe of more than 15 years, most probably 20 by the time all stages are mostly completed. There is room for more generous visa treatment of investors and opportunities for the extension of the Free Zone rules currently applicable in Duqm. Evidently, even significant growth in future supply will not negatively affect prices if sufficient market confidence exists, which is the case in some sectors such as logistics and tourism—numbers here were up by double-digits last year. Third, what is the impact of the government’s budget deficit? Certainly, the rating agencies were not kind last year, worried by debt-GDP metrics and the government’s expanded infrastructure programme. But real estate investors have reason to evaluate macroeconomics more broadly, incorporating forecasts of interest rates, unemployment and economic growth, rather than concentrating on government deficits. Even the IMF now expects the deficits to moderate over the next five years with a gradual reduction in the rate of increase of external debt and a decline in the current account deficit . Finally, from the standpoint of early 2020, naturally there is concern over the impact of the Coronavirus. Judging from the economic impact of SARS, escalated for the rise in China’s global economic footprint since then, as well as greater globalisation, economic projections will certainly have to be revised downwards. But analysts need to be careful in their assessments of where the impact will be most keenly felt, and when: most Omani tourism comes from the Gulf, for example, not from Asia-Pacific, although the oil price has for the time being dipped lower than 2019 forecasts on which ratings were based. Government expenditure has already been focused on infrastructure that will support the real estate market and if global markets slow still further, the Omani government will take compensating action. It is a complex, and currently evolving, macroeconomic picture. Omani real estate investors will not be celebrating for some time yet. But careful attention to the macroeconomics of the market will pay off.
1
https://www.imf.org/en/News/Articles/2019/07/03/pr19266-imf-executive-board-concludes-2019-article-iv-consultation-with-oman
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PROPERTY MARKET REPORT 2O19–2O2O
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OMAN
PROPERTY MARKET REPORT 2O19–2O2O
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OMAN
PROPERTY MARKET REPORT 2O19–2O2O
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Khalil Alzadjali Head of Oman
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ABU DHABI
SHARJAH
MUSCAT
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Disclaimer: The information and analysis contained in this report is based on information from a variety of sources generally regarded to be reliable, and assumptions which are considered reasonable, and which was current at the time of undertaking market research, but no representation is made as to their accuracy or completeness. We reserve the right to vary our methodology and to edit or discontinue the indices at any time, for regulatory or other reasons. The report and analysis do not purport to represent a formal valuation of any property interest and must not be construed as such. Such analyses, including forward-looking statements are opinions and estimates only, and are based on a wide range of variables which may not be capable of being determined with accuracy. Variation in any one of these indicators can have a material impact on the analysis and we draw your attention to this. Cavendish Maxwell and Property Monitor do not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this report.