Oman: Overview
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Oman’s real estate boom continues
Oman is in the midst of an enormous property boom. House prices have surged in Muscat, the capital, and the coastal cities of Salalah, Sohar and Sur.
With the launching of The Wave and the Blue City, the two largest Integrated Tourism Complexes in Oman, property prices in the whole sultanate have gone up rapidly.
The price of land has also been rising steadily. Real estate analysts claim that land prices in some areas in the sultanate have gone up tenfold in the last three years.
Residential land price in Oman soared by about 400% over the past two years to OMR81 (US$210) per sq. m. in June 2008, from OMR16.3 (US$42) per sq. m. in 2006, according to Al Mazaya Holding Co., a real estate shareholding company. Despite the surging residential land prices in Oman, they are still among the cheapest in the Middle East.
The growing number of expatriate workers, the liberalisation of real estate laws and the young demographics of Omanis led housing demand to rise. Huge oil revenues drive the strong economy and rising purchasing power. Foreign investments and healthy non-oil sectors added to the boom in the real estate market. On the supply side, soaring construction costs and land prices pushed property prices further.
In February 2006, a Royal Decree allowed foreigners and expat workers to own real estate in Oman, but only in Integrated Tourism Complexes (ITCs). Foreign property owners also automatically acquire residency rights for themselves and their immediate families, by virtue of the property acquisition.
RENTAL YIELDS
Escalating rents in Oman
Since 2006, housing rents in Oman have been rising steadily. Muscat witnessed the highest rent increases. In Azaiba, Muscat’s coastal village, a two-bedroom apartments now rent for OMR500 (US$1,300) to OMR600 (US$1,560) per month; up from OMR250 (US$650) to OMR300 (US$780) a year earlier.
In June 2008, the average price of apartment in Oman is OMR630 (US$1,637) per sq. m., according to Al Mazaya Holding Co., a real estate shareholding company in the Middle East.
“With Oman developing horizontally, there is no risk of prices (or rents) coming down” says Said al Busaidy, general manager of Emaar Real Estate.
TAXES AND COSTS
Last Updated: Nov 29, 2006
Oman: Absolute freedom from tax
income taxes are levied in Oman.
Capital Gains: There are also no capital gains taxes.
Inheritance: There are no inheritance taxes.
Residents: The system is the same for residents and non-residents.
BUYING GUIDE
Last Updated: Nov 29, 2006
Buying costs in Oman are minimal
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.
LANDLORD AND TENANT
Last Updated: Nov 29, 2006
Oman's law is pro-landlord
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 month’s or 1 year’s 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.
ECONOMIC GROWTH
Last Updated: Sep 30, 2008
High oil prices and reform fuel economic growth
Oman, with a population of around three million, is the oldest independent state in the Arab world. Mainly due to high revenues brought by high oil prices in the global market, GDP per capita is around US$19,463.
In July 1970, Sultan Said bin Taimur, known as a feudal and isolationist ruler, was overthrown by his son in a bloodless coup.
The new ruler, Sultan Qaboos bin Said immediately initiated economic reforms. He pursued liberalisation and modernisation programmes and boosted spending on education, health and social welfare.
In 1981, Oman became one of the six founding members of the Gulf Cooperation Council. In November 2000, it joined the World Trade Organization (WTO). In January 2006, Oman signed the U.S.-Oman Free Trade Agreement.
In 2005, Oman signed agreements with several foreign investors to boost oil reserves, build a power plant, and develop a second mobile phone network.
The government, on its “Vision 2020” Development Plan, intends to diversify the economy and spend more on developing its non-oil sectors mainly manufacturing, industry and tourism.
To reduce unemployment and limit dependence on foreign labour, the government pursues a policy called Omanisation. This aims to replace foreign expatriate workers with local workers.
RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Looming housing slump in China
America & Caribbean
The great U.S. housing market crash
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): n.a. | Rental Yield: n.a. |
| Rent/month: n.a. | Income Tax: 0.0 Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
3.0%
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: 0.0 Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice. | |
NOVEMBER 2009
MARCH 2009
- Low rents lure commuters to Oman - The National
APRIL 2008
MARCH 2008
- Oman rent law to safeguard tenants - Arabian Business
JULY 2007
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