Oman real estate ‘in good health despite drop in deals’

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• Deal value down 20% in January
• ‘One-off correction’, economists say
• Ambitious government projects

Higher interest rates are hitting Oman’s real estate industry, but economists are confident that a drop in transactions in January does not signal the start of a downturn in the sector.

The value of real estate deals in the sultanate fell by more than 20 percent to OR208 million ($540 million) in January, compared to OR261 million for the same month in 2023, according to the National Centre for Statistics and Information.

“I’m not sure I’d read too much into one month of data in isolation as it’s a volatile series,” said Maya Senussi, lead economist, Middle East, at Oxford Economics.

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Real estate transactions in the sultanate surpassed OR2.6 billion in 2023, buoyed by continued population growth and the country’s efforts to diversify its economy away from a reliance on hydrocarbons.

Mansoor Ahmed, executive director at real estate consultancy Colliers in Mena, described the January drop as “a one-off correction”.

The latest figures from the statistics centre show that the number of mortgage contracts fell by 10.4 percent to 1,522, “likely reflecting higher interest rates”, according to Senussi.

A report from Savills revealed that the country’s expatriate population has grown by a third in eight months – from 1.6 million in September 2022 to 2.2 million in May last year. This is the highest total yet for the expatriate population.

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The Omani government, led by Sultan Haitham bin Tariq, has launched a number of initiatives including the Greater Muscat City structural plan as well as plans for Greater Sohar and Salalah.

An urban development called Sultan Haitham City, which will cover an area of 14.8 million square metres, has also been announced. It is expected to house 100,000 people with 20,000 housing units, as well as providing commercial, retail, food and beverage, healthcare and education facilities.

Omani developer Al Fayha United Development in March launched a 13,000 sqm mixed-use project in Muscat.

“Developers and investors should transform their developments to destinations and ensure proper provision of social infrastructure to meet the needs of a population base that has grown more inspired and demanding,” said Ahmed.

Oman’s budget surplus reached nearly a quarter of a billion dollars in January, helped by public income from state investments, according to its state-owned news agency.