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Last Updated: Sep 16, 2016




The opening of Omanís real estate market to foreigners began in 2002, as part of the ďVision 2020Ē plan, which aimed to diversify Omanís economic base and reduce its dependence on oil revenues. In December 2002, GCC nationals gained the right to own real estate for residential or investment purposes. In February 2006 other nationalities were also given the right to own real estate, but only in Integrated Tourism Complex (ITC) developments.

Recently, the government has been again considering opening up more areas for foreign homebuyers, hoping to buoy the property market. The recommended reforms include allocating special zones where expats can buy properties at more reasonable prices as compared to tourist complexes.

Under current laws, expatriate owners automatically get residency rights for themselves and their immediate families when they buy property in designated ITC developments.

Growing expat numbers fuelled a real estate boom. The expat population rose by more than 12% per annum during the period 2004-2015, and by Q1 2016 there were more than 2 million expats in Oman, according to the†National Centre for Statistics and Information.† The expatriate workforce reached 1,747,000 in Q1 2016.

Foreigners account for almost 90% of all workers in Omanís private sector, according to the Manpower Ministry. Omanís population is 57% native Omanis and 43% expatriates, far from the 75:25 ratio of Omanis and expats in 2004. Omanís population is young, with a median age of 24.9 years. Omanís total population was 3.84 million in 2015, and has been growing at an annual average rate of 3.6% since 2004.

The major ITCs such as Al Mouj Muscat (formerly The Wave) and Muscat Hills Golf and Country Club have led the countryís housing market in terms of growth and value. In recent years, these ITC developments have continuously attracted owners and tenants, with "virtually zero" vacancies and high rents, according to†Savills Oman.

ITC prices fell during 2009, but these properties remain in demand due to their superior design, setting and facilities.† In†Al Mouj Muscat†and†Muscat Hills, resale values of apartments are stable, according to some local property experts.

Homebuyers are now leaning towards lower priced residential properties. This is reflected in the latest sales transactions figures from the†National Centre for Statistics and Information, which showed that transaction volumes increased in the first two months of 2016 from a year earlier but traded value declined substantially to OMR 563 million (US$ 1.46 billion) in Jan-Feb 2016, from OMR 1 million (US$ 2.6 billion) in the previous year.

Aside from the continuous interest in the ITCs, there have been significant Ďoff planí sales of new apartment developments in the Muscat neighborhood. Demand has been driven by younger Omanis, who buy 75% of all central area developments, according to Savills Oman. These well-educated and savvy individuals are eager to create their own investment portfolios, buying units they intend to lease out upon completion.

Aside from younger Omani buyers and Gulf Cooperation Council (GCC) nationals, other groups such as Syrians, Iranians also buy houses in the Sultanate.

Newly launched off-plan apartment developments in Oman, Q2 2016:
  • In Ruwi/East of Centre, the main business and commercial district of Muscat, prices of one-bedroom apartments start at OMR 30,000 (US$77,942), according to Savills Oman. Two- and three-bedroom apartments are offered in the market for as low as OMR 45,000 (US$116,914) and OMR 60,000 (US$155,885), respectively.
  • In Qurum, Muscatís upmarket suburb, prices of one-bedroom apartments range from OMR 38,000 (US$98,727) to OMR 45,000 (US$116,914). Prices of two- and three-bedroom apartments start from OMR 65,000 (US$168,875) and OMR 85,000 (US$220,837), respectively.
  • In Al Khuwair, one-bedroom apartments are priced from OMR 38,000 (US$98,727) to OMR 45,000 (US$116,914). Prices of two-bedroom apartments start from OMR 65,000 (US$168,875) while for three-bedroom apartments, prices start from OMR 85,000 (US$220,837).
  • In Bausher, one of the newly established residential areas in Muscat, one-bedroom apartments are priced from OMR 33,000 (US$ 85,737) to OMR 45,000 (US$ 116,914); two-bedroom apartments, from OMR 45,000 (US$ 116,914) to OMR 65,000 (US$ 168,875); and three-bedroom apartments, from OMR 70,000 (US$ 181,866) to OMR 75,000 (US$ 194,856).
  • In Al Mawella/East of Centre, one-bedroom apartments are offered for as low as OMR 25,000 (US$ 64,952) while two-bedroom apartments are priced from OMR 30,000 (US$ 77,942). Prices for three-bedroom apartments range from OMR 35,000 (US$ 90,933) to OMR 40,000 (US$ 103,923).

The housing market is expected to remain steady in the coming months, amidst weakening economy. The economy is projected to expand by just 1.8% this year, down from an annual growth rate of 4.1% in 2015, and the lowest growth since 2004, according to the International Monetary Fund (IMF).

Analysis of Oman Residential Property Market »


RENTAL YIELDS
Last Updated: Jan 01, 1970


Escalating rents in Oman

Rents in Oman have skyrocketed in the recent past, especially in Muscat and other high demand areas. After rising 21.4% in 2008, rents rose 16% in 2009.† But by 2010, average rental rates were dropping.† The rent hikes in the 2 years before mid-2008 prompted a huge new supply of residential rental properties especially in the capital area, according to Cluttons, much of it of lamentably poor design and quality.

In central areas, rents for two-bedroom apartments in Q1 2011 were around OMR 400 (US$ 1,040) per month, down from OMR 425 (US$ 1,105), according to Savills Oman.† Rents for 4-5 bed villas were around OMR 1,150 (US$ 2,991) to OMR 1,500 (US$ 3,901).

Rents in The Wave range from OMR 800 (US$ 2,081) to OMR 1,750 (US$ 4,551) per month, depending on the housing type, while rents in Muscat Hills range from OMR 600 (US$ 1,560) to OMR 1,700 (US$ 4,421).

In June 2008, as a result of the rising rents, new rules were introduced.

  • Landlords may now only increase the rent every 3 years, with a maximum rent increase of 7% of the annual rent stipulated in the lease contract.†
  • The law also bars landlords from evicting tenants before the end of the lease, and imposes a minimum lease period of 4 years for residential property, and 7 years for commercial


TAXES AND COSTS
Last Updated: May 05, 2016



Rantal Income: Rental income is taxed at a flat rate of 3%.

Capital Gains: There are no taxes levied on capital gains realized by individuals, unless it is derived from a business or professional activity. Capital gains derived from trade or business are taxed at a flat rate of 15%.

Inheritance: There are no inheritance taxes.

Residents: No personal income taxes are levied in Oman. Trade or business income exceeding OMR30,000 (US$60,000) are taxed at a flat rate of 15%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: May 05, 2016



The total roundtrip transaction costs are just around 3%. Because of the relative immaturity of the real estate market most of the properties are bought from the government.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Nov 29, 2006



Rents
The initial rent can normally be freely determined by the parties by mutual agreement.

Security Deposits
The landlord's interests are protected by either:

a. An advance payment of three monthís or 1 yearís rent; or
b. Promissory note for the payment of rent throughout the lease; or
c. Post dated cheques for each of the rent payment dates.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Sep 16, 2016


Oil sector still dominates; economic diversification continues

Oman homes for saleOmanís diversification plan ďVision 2020Ē has been quite effective. Petroleum activitiesí contribution to Omanís total GDP in 2015 was just around 33.9%, down from 47.2% of nominal GDP in 2014, 50.6% in 2013, and 52.3% in 2012. The services sector accounted for around 49% of GDP in 2015, a sharp rise from 40.7% in 2014 and 37.7% in 2013.

Despite this, oil remains Omanís top revenue generator. The countryís 3.3% economic growth in 2015 was characterized by a 4% growth in the hydrocarbon sector, compared to a contraction of 0.8% in 2014, according to the World Bank. Likewise, the non-hydrocarbon sector grew by 3% last year.

The decline of the petroleum sector as a percentage of GDP was largely due to the plunge of crude oil prices in 2015 to an average of just US$56.45 per barrel, down more than 45% from US$ 103.2 in 2014. However since then, crude oil prices have declined even further, averaging US$ 36.40 per barrel in the first seven months of 2016.

Oil and gas revenues were equivalent to around 26.4% of GDP in 2015 and accounted for 78.7% of total government revenues. Oil and gas represented about 52.1% of Omanís total merchandise exports last year.

Oman oil sector
The Omani government recently released its 9th Five-Year Plan (2016-2020), which focuses on social and regional development, economic diversification, welfare and social benefits enhancement, and boosting the private sector.

One feature of the plan is new public-private partnerships (PPPs), including:
  • The Mandinat Al Ifran project
  • Port Khasab
  • Port Sultan Qaboos
  • Soth Batinah Logistics Area

Oman gdp inflationIn the 2016 approved budget, the budget for housing projects and government subsidies on housing loans dropped substantially, as compared to the previous yearís budget.

Oman had 551,058 housing units in 2010, 27.9% up on 2003. Arabic houses comprised 31.2% of the total housing stock; villas, 28.6%; apartments, 20.9%; rural houses, 3.2%; and improvised housing units, 2.4%.







  • Absolute tax freedom
  • Pro-landlord rental market
  • Strong economic growth
  • Potential for high yields
  • Relatively immature market
  • Uncertainty over new laws
RESIDENTIAL PROPERTY FACTS
Price (sq.m): n.a. For a 120 sq. m. property, usually an apartment.
Rental Yield: n.a. For a 120 sq. m. property, usually an apartment.
Rent/month: n.a. For a 120 sq. m. property.
Income Tax: 2.25% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 3.00% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 15.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

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