The move adds flexibility to the market and signals further opening up of the country to foreign investors.
Muscat: Big developers and major investors will benefit from the new ownership scheme rolled out by the Oman government recently that allows people to own properties outside integrated tourism complexes (ITC), say real estate companies in the country.
The scheme announced by the Ministry of Housing and Urban Planning enables those who own property valued between OMR250,000 and OMR500,000 to receive five-year residency visas, while those who own property valued above OMR500,000 are eligible for 10-year residency visas.
Real estate developers say the latter is particularly attractive, as 10-year residency visa holders can invest in industrial, commercial and residential properties, while five-year visa holders are restricted to owning residential assets only.
“One viewpoint is that this will be extremely beneficial to Oman as it can trigger a flood of investments into a wide range of assets beyond the standard ITC residential unit, based on the belief that there is significant pent-up demand for such assets,” said Ihsan Kharouf, head of the Oman office for Savills Middle East.
“The real beneficiary of the new law in our view will be the OMR500,000-plus option which allows the acquisition of industrial or commercial assets in addition to residential assets,” he said. “This option is also attractive because it does not compete with residential assets that expatriates can already acquire within ITC projects at better price points, and opens up new investment avenues.
“It is likely that we will see interest among expatriate businessmen in Oman in owning factories, logistics warehouses, retail units or offices,” he added. “Businesses will be able to benefit from the greater security afforded by ownership and can potentially insulate themselves from future increases in rental rates.”
Kharouf explained that owners would also have more control over their assets and would be encouraged to make capital investments in the property which would not have been viable in a leasehold arrangement. “Ultimately, we consider that this is a positive move as it adds flexibility to the market, specifically to expatriate business owners with commercial or industrial occupational requirements in the country, and signals further opening up of the country to foreign investors,” he explained.
With Oman currently pursuing diversification and expansion of its economy, the property ownership scheme also ties in directly with Vision 2040, the country’s plans to create a diversified and sustainable economy with good employment opportunities and living standards for all.
Fahad Al Ismaili, the founder of Tibiaan Properties, said there will be indirect benefits to the five areas earmarked under the Tanfeedh initiative, which looks to wean Oman away from oil-and-gas-based sources of income and widening the sources of revenue.
The five areas are agriculture and fisheries, manufacturing, transportation and logistics, energy and minerals and tourism.
“If you have a major property developer who owns OMR 500,000 worth of assets, he now has the ability to expand his portfolio by building a tourist site, a factory, creating office space, etc. There are many options available to him. All these economic activities will contribute to diversification,” he said. “That is the major advantage of this law, so it is the big investors who will benefit.
“When you start constructing your building, you will engage with more local companies, employ local manpower, use in-country services. So, efforts like these are geared towards improving in-country value as well,” added Ismaili.
“Depending on what sort of site you are building, it is likely you will engage other services over the long-term,” he said. “For example, if you have a tourist site, then you will need services and facilities for the tourists who will come there, or if you have a factory, you will need transport facilities, you will need maintenance services and other essentials, so, there will be many knock-on benefits.
“Similarly, if you build a residential property, or if you are bringing your own family as an investor, then you will need local services such as supermarkets, petrol stations, restaurants, medical facilities and so many others. So, there you have another source of both economic benefit and employment,” said Al Ismaili.