A LAND FOR ALL

Oman 2018 | REAL ESTATE & TOURISM | FOCUS: INTEGRATED TOURISM COMPLEXES

Oman's integrated tourism complexes (ITCs) allow foreign nationals to own property on a freehold basis. They have given the country's tourism and real estate sectors an innovative boost and might pave the way for further liberalization.

While foreigners were traditionally only able to lease property in Oman, ITC zones allow expats and tourists to own a piece of the Sultanate while investing in the country's stable property market. Irrespective of nationality, owners can freely sell their property at any time, automatically gain residency rights for their entire family, and pass on their property through inheritance. By reinventing the country's real estate sector in this manner, the stage is set to reach the government's ambitious tourism goals.

ITC properties come in many shapes and sizes: from one-bedroom apartments to 10-bedroom villas, with five-star amenities or architecture that melts into the natural landscape, with sharia-conforming establishments or conventional bars at the seaside. Some ITCs are over 400,000sqm and connected through rail links. Many of them include yacht clubs, golf courses, retail areas, sport centers, and even theme parks. The mix of local and foreign residents is fertile ground for cultural exchange and international networking. The size and setup of ITCs make for a safe area with a community feel. Their strategic locations allow residents a balanced proximity to commercial hubs and natural scenery while creating employment opportunities for a variety of Omanis.
Initiatives like these help diversify the Sultanate's economy away from oil and gas dependency. It fits well into Oman's 25-year strategy, which sets out to capitalize on its appeal to tourists by virtue of its archeology, conservation, and natural beauty. Through this strategy, the Omani government intends to create 500,000 additional jobs, increase international tourist arrivals 10-fold, and gain an additional USD49 billion in investments. Of these investments, 88% have thus far come through the private sector, and ITCs are significant beneficiaries. Some of the contracted projects in the zones surpass USD1 billion. In this way, the initiative contributes positively to the government's ambitions to lower the budget deficit.
ITCs have been hailed by expats for taking away their visa worries and providing them with a place to live without wasting money on rent. Omanis see it as a sustainable manner to invest in their country's real estate sector. International tourists are now able to have a second home in the country with some of the most beautiful mountains and beaches in the Middle East. From the government's perspective, ITCs have been a clever way of attracting foreign investment in an open yet controlled way.
The fact that most ITCs attract a 50-50 mix of Omani and foreign investors is illustrative of the crosscutting commercial appeal. The demand side keeps diversifying, as made apparent by Nasser Al Sheibani, CEO of Al Mouj. Sheibani told TBY that, “while traditionally most of our clients were from the region, our overseas customer base has grown from 5 to 27% between 2015 and 2017." This growing global interest combined with a young population is expected to further expand the market.
Al Mouj has proven its edge in mixed-use and retail development, receiving honors for best mixed-used development in Oman, best residential single-unit property in the region for Zunairah Villas, best residential development in Oman for Ghadeer Park Villas, and best retail development in Oman for the Walk at the 2017 Arabian Property Awards ceremony. All developments are part of Oman's first ITC, Al Mouj Muscat. Following Al Mouj's example, more ITCs are now under construction.
The success of ITCs has created an appetite to further open up the real estate market. Mohammed Al Ghassani, Deputy Chairman of advisory body Majiris al Shura, was quoted saying, “We must allow expatriates living in Oman to buy property outside ITCs under certain conditions." A move like this would open up new market segments, particularly for the many foreign workers from developing countries like Bangladesh, Pakistan, and the Philippines. If some of these workers could move their families to the country by owning a home, it would reduce the USD10 billion that flows out of the country annually through remittances.