Oman Property Market Report 2019-2020

MARKET REPORT www.cavendishmaxwell.com

ABOUT Established in 2008, Cavendish Maxwell is one of the largest and most respected property consultancies in the region. An influential partner and trusted advisor to key stakeholders in real estate markets throughout the Middle East and North Africa, we offer a comprehensive range of exceptional property services across a diverse mix of sectors and asset classes.

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Our team of highly qualified professionals is trusted by real estate market stakeholders throughout the region, including international and domestic banks, property developers, governments, owners and investors, asset managers and professional services firms. We service a diverse mix of specialist property sectors including retail, offices, hospitality, healthcare, education, industrial and logistics.

Cavendish Maxwell also publishes independent reports, prepared to globally accepted standards, for loan security, bank lending, audit, insurance reinstatement, dispute resolution, risk management, debt recovery, performance analysis, purchase and sale advice, and third party reliance purposes.

FOREWORD The Sultanate of Oman appointed a new leader in 2020 after the passing of Sultan Qaboos bin Said, credited with transforming Oman into a prosperous country with a peaceful foreign policy during his 49-year reign.

The swift and smooth appointment of his cousin Sultan Haitham bin Tariq as the new ruler sent a clear message to the world about Oman’s intent to maintain transparency and stability.

It is now clear that the new Sultan will continue Oman’s foreign policy as outlined by the former ruler, with a focus on maintaining its strategic role as a mediator in the region. Not only will he have to cautiously tackle international affairs, most recently flared with increased tensions between the United States and Iran in the strategically located Gulf of Hormuz, but also respond to domestic challenges such as mounting debt, high unemployment levels and a generally sluggish economy.

In our latest report, we explore the effects of these developments on Oman’s real estate sector, reviewing the performance of the residential, retail, office, industrial and hospitality segments in 2019.

CONTENTS 4

Macroeconomic Overview

5

Demographic Overview

6

Real Estate Activity

8

Tourism Overview

10

Residential Market Overview

18

Office Market Overview

22

Retail and Entertainment

26

Hospitality Market Overview

30

Industrial Market Overview

34

Market Spotlight

36

A Word From Our Chief Economist

38

Key Services

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

MACROECONOMIC OVERVIEW

In 2018, hydrocarbon production was a major contributor to Oman’s Gross Domestic Product (GDP), with Central Bank of Oman data showing a contribution of 37%, more than doubling the 2017 levels.

According to World Bank data, Oman’s real GDP was estimated to decline to 0.3% in 2019 from 2.2% in 2018. Whilst official figures on growth for the full year are not yet released, one of the drivers of the expected decline in 2019 were the oil production cuts that were put in place by the OPEC+ group of oil-producing countries, including Oman.

Whilst the lower contribution by the petroleum sector likely weighed on the economy’s expansion in 2019, the World Bank in its December 2019 update estimated growth to expand to 3.7% in 2020, aided by increased natural gas production from new fields. However, since then, concerns around the Covid-19 outbreak have deepened and the Opec+ deal collapse has exerted downside pressure on oil prices.

Meanwhile, Oman’s diversification efforts are underway with the non-oil economy estimated to grow by 1.5% in 2020 aided by the Tanfeedh programme, which focusses on developing sectors such as logistics, tourism, transport, mining, manufacturing and fisheries.

OMAN GDP AT CURRENT PRICES 2015–JUN 2019 3-year CAGR*: 3.6%

30,000

25,000

25,000

*Compound Annual Growth Rate Source: Royal Oman Police; Ministry of Finance; National Centre for Statistics and Information; World Bank Data; Cavendish Maxwell 2020

4

5,000

0

Qatar

UAE

Kuwait Bahrain

6,315

2015 2016 2017 2018 Jan– Jan– Jun18 Jun19

10,000

8,931

14,050

14,325

30,489

0

27,216

27,385

5,000

28,749

10,000

15,000

9,251

15,000

20,000

13,170

Y-o-Y growth: -1.9%

16,542

20,000

GDP per capita (OMR)

30,000

26,550

35,000

GDP at current prices (OMR million)

GDP PER CAPITA IN GCC COUNTRIES 2018

Saudi Arabia

Oman

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

DEMOGRAPHIC OVERVIEW

OMAN POPULATION BY NATIONALITY DECEMBER 2019

According to the National Centre for Statistics and Information (NCSI), the population of Oman stood at 4.7 million as of December 2019 compared to 2.9 million in 2008.

In 2019, locals comprised 57.7% of total population whilst expats made up the remaining 42.3%.

57.7%

In an attempt to increase the domestic participation of its labour force, Oman has adopted a phased extension of a temporary visa ban on hiring expats in the professions of IT, accounting and finance, sales and marketing, management and human resources, insurance, media, medical, airports and engineering.

Between December 2018 and December 2019 alone, the total expat population in Oman recorded a negative year-on-year (YOY) growth of 2.9%. However, backed by a young local population whose skill-sets are being sharpened through several government initiatives, Oman is set to display its investment value to global investors.

42.3%

TOTAL POPULATION IN OMAN 2008–NOV 2019

4,664,844

4,647,110

4,560,000

4,414,000

4,159,000

3,993,000

3,855,000

3,623,000

3,295,000

2,773,000

3,174,000

10-year CAGR: 3.9%

20%

19%

5,000,000

15%

4,500,000 4,000,000 3,500,000

25%

10%

11%

10% 6%

3,000,000

4%

6% 4%

5%

3% 1%

2,500,000

0.4%

2,000,000

0% -5%

1,500,000 1,000,000

-10%

-13%

500,000

-15%

0 2009

2010

2011

2012

2013

2014

Total population

2015

2016

2017

2018

2019

Y-o-Y growth 5

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

REAL ESTATE ACTIVITY

Supported by the recovery in oil prices until 2019, Oman’s real estate market gradually recovered, presenting several opportunities for owners and tenants alike.

Real estate activity includes sale, grant, inheritance, exchange, mortgage, and mortgage redemption, usufruct and division transactions.

According to the NCSI, the value of traded contracts during December 2019 in Oman stood at over OMR 263 million, whilst collected fees amounted to over OMR 7 million.

The total value of sale contracts in 2019 stood at over OMR 70.6 million through 4,674 sale transactions.

Meanwhile, the total value of mortgage contracts showed an uptick of 13.5% from OMR 1.6 million in December 2018 versus OMR 1.8 million in December 2019 through relatively unchanged contracts.

After recording a steep drop to OMR 2.6 billion in 2017 from OMR 6.6 billion in 2016, traded value of property in Oman improved slightly to OMR 2.7 billion in 2019.

6

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

REAL ESTATE ACTIVITY IN OMAN 2017-2018

2019

Key Indicators for Oman’s Real Estate Sector

Oct

Traded value of property (OMR million)

Dec

Total

2018

2019

% Change

216

471

263

950

2,641

2,771

4.9

7

6

7

20

84

82

-2.4

83

60

71

214

1,002

911

-9.1

5,161

3,716

4,674

13,551

58,828

56,887

-3.3

130

410

190

730

1,623

1,837

13.2

1,535

1,118

1,139

3,792

16,027

16,017

-0.1

3

1

2

6

16

23

43.8

164

96

170

430

1,527

1,641

7.5

18,895

14,513

18,209

51,617

223,492

211,191

-5.5

89

58

37

184

1,396

875

-37.3

Fees collected for all legal documents (OMR million) Traded value of sales contracts (OMR million) Number of sales contracts Traded value of mortgage contracts (OMR million) Number of mortgage contracts Traded value of barter contracts (OMR million) Number of barter contracts Number of properties issued

Nov

End of Dec

Number of properties issued for GCC nationals

2,771

2,641

2,609

7,000

6,622

TRADED VALUE OF THE PROPERTY IN OMAN DECEMBER 2016–2019

10% 5%

6,000

0%

0%

1%

-10%

5,000

-20% 4,000 -30% 3,000 -40% 2,000

-50%

1,000

0

-60%

-61%

2016

2017

Traded value of property (OMR million)

2018

2019

-70%

Y-o-Y growth 7

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

TOURISM OVERVIEW

As part of its diversification strategy, Oman is focusing on its tourism industry as a key growth driver of the economy.

Tourism contributed 2.8% to Oman’s GDP in 2016. In the same year the government launched the Oman Tourism Strategy (2016 -2040)‫زز‬. The strategy aims to boost the share of the sector’s contribution to GDP to 6-10% by 2040, attracting 11 million local and international tourists, and creating over 500,000 jobs through an investment of OMR 19 billion.

In 2018, tourism contributed 2.9% to Oman’s GDP. Total tourism revenue in Oman stood at OMR 1.4 billion of which inbound tourists contributed 49% at OMR 680 million. The remaining 51% at OMR 700 million was derived from domestic tourism.

According to NCSI data, the number of visitors to Oman has increased over the last five years, from 1.9 million in 2013 to 3.2 million in 2018 registering a positive CAGR of 11%.

Compared to 2017, the number of visitors coming to Oman recorded a year-on-year growth of 2%. In 2019, Oman welcomed 3.5 million visitors.

Visitors from GCC countries made up the highest share at 45%, followed by Asians at 21% and Europeans at 19%. Of the 2.3 million overnight visitors, 1.5 million stayed in hotels and hotel apartments, 484,000 with relatives and friends, whilst the remaining stayed in furnished flats and other accommodation.

Visitors spent a total of OMR 679.2 million of which accommodation represented the bulk of expenses at 31%. Accommodation spending reached OMR 213 million in 2018 compared to OMR 183 million in 2017, registering a year-on-year increase of 15.6%.

Apart from increasing contribution towards GDP and generating employment opportunities, Oman’s push for tourism is expected to support 1,200 tourism SMEs and stimulate the overall local economy, readying it for future growth.

8

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

NUMBER OF VISITORS TO OMAN 2013–2018

1,922,000

2,225,000

2,635,000

3,207,000

3,179,000

3,241,000

5-year CAGR: 11%

2013

2014

2015

2016

2017

2018

GCC

Other Arabs

3,500,000

Number of visitors

3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0

NUMBER OF VISITORS TO OMAN BY PURPOSE OF VISIT 2018

Asians

Europeans

Others

NUMBER OF VISITORS TO OMAN

BY TYPE 2018

2,500,000

32%

1,500,000 1,000,000 500,000

Leisure and recreation

Business

Visiting relatives and friends

Others

0

941,000

46%

2,000,000

2,301,000

11%

Number of visitors

11%

Overnight visitors

Same-day visitors

9

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

RESIDENTIAL MARKET OVERVIEW

As Oman pushes ahead with its Omanisation drive, the number of expats leaving the country as a result of visa bans for foreign workers has increased, sending property rents and prices lower.

NCSI data showed that between December 2018 and 2019, the total number of expats decreased 2.9% from 2,030,194 to 1,972,088.

To adjust to the changing market scenario, some landlords and owners have lowered their asking rents and prices, whilst offering better maintenance services. Consequently, they are witnessing lower vacancies, compared with others who are less flexible or have poorly maintained properties.

With increased availability, tenants and buyers are preferring to move to certain areas of Muscat and other cities.

10

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

11

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

RESIDENTIAL PRICE PERFORMANCE

OMR 105,000

OMR 187,500

OMR 142,000

OMR 297,500

OMR 150,000

OMR 440,000

PRICE BY UNIT TYPE 2019

OMR 486,000

APARTMENT

OMR 780,000

VILLA/TOWNHOUSE

1 BR

2 BR

2 BR

3 BR

3 BR

4 BR

4 BR

5 BR 6 BR

OMR 100,000 OMR 120,000

OMR 25,000

OMR 75,000

Al Mouj Al Khoudh Ma’abela

12

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

OMR 74,000

OMR 222,000

OMR 48,000

OMR 88,000

OMR 245,000

OMR 55,000 OMR 70,000

OMR 220,000 OMR 240,000 OMR 73,000

OMR 240,000

OMR 108,000

OMR 371,000

OMR 135,000

OMR 558,000

OMR 210,000

OMR 695,000

OMR 380,000

OMR 303,000 OMR 352,000 OMR 463,000

OMR 50,000

OMR 130,000 OMR 180,000 Qurm

OMR 270,000 OMR 345,000

Shatti Al Qurm

Al Khuwair

Madinat Al Sultan Qaboos

Azaiba

OMR 38,000 OMR 50,000 OMR 79,000 Muscat Hills Bausher

13

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

RESIDENTIAL RENT PERFORMANCE

OMR 500

OMR 790

OMR 700

OMR 1,200

OMR 900

OMR 1,300 OMR 1,700

MONTHLY RENT BY UNIT TYPE 2019 APARTMENT

VILLA/TOWNHOUSE

1 BR

2 BR

OMR 160

OMR 350

2 BR

3 BR

OMR 170

OMR 480

3 BR

4 BR

OMR 240

OMR 520

5 BR 6 BR

Al Mouj Al Hail Al Khoudh Ma’abela

OMR 125

OMR 250

OMR 175

OMR 150

OMR 350

OMR 200

OMR 200

14

OMR 300

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

OMR 230

OMR 550

OMR 165

OMR 400

OMR 300

OMR 680

OMR 195

OMR 490

OMR 425

OMR 950

OMR 230

OMR 600

OMR 235

OMR 500

OMR 230

OMR 500

OMR 280

OMR 610

OMR 410

OMR 700

OMR 365

OMR 830

OMR 375

OMR 800 OMR 900

OMR 860 OMR1,000

OMR 1,200 OMR 1,500

Qurm

OMR 2,200

Ruwi

Shatti Al Qurm

Al Khuwair Madinat Al Sultan Qaboos

Azaiba

OMR 850 OMR 1,100 OMR 1,450 OMR 1,800

Muscat Hills

Bausher

OMR 235

OMR 500

OMR 295

OMR 600

OMR 305

OMR 500

OMR 315

OMR 700

OMR 400

OMR 650

OMR 720

OMR 760

OMR 850

OMR 1,000

15

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

RESIDENTIAL UPCOMING SUPPLY Oman is expected to receive additional supply of residential properties during 2020-2021. Some of the new developments include Habitat in Al Khuwair with 44 residential units, 44 retail units and 118 office units, The Myriad Muscat with 1,476 units and Al Hail Green Residential Development - Phase 2 containing 360 units.

Al Hail Green Residential Development - Phase 2

Musandam

Seeb

Khasab

Seven blocks consisting G+5 buildings with 168 3-bed units.

Five blocks consisting G+7 buildings with 192 2-bed units.

Parking capacity for 440 cars.

Al Batina

Al Buraimi

Suhail Bahwan Group 2020 360

Ad Dhahirah

BBH Towers - Airport Heights Near Muscat International Airport Four G+8 residential towers.

Development consists of a small mall, gym, swimming pool, children’s rest area and a hanging garden.

Private Developer 2020

Oceana Luxury Sea Apartments Muscat Apartment size ranges between 65 and 161 sq m.

Apartment price to range between OMR 37,000 and OMR 92,000.

Arabian Properties 2020 180

Duqm Frontier Town: Phase 2 A

The Myriad Muscat Seeb Student-housing complex designed to accommodate over 2,500 residents.

Includes a supermarket, retail stores, food outlets and a fitness club.

Sandan Development and Strategic Housing Group (SHG) 2021 1,476

Al Muna Gardens Bausher Highlands OMR 22 million development consisting 3-4 bed villas.

Apart from retail and entertainment areas, it will have a nursery for children and commercial spaces for rent.

Zain Properties 2021 122

Duqm Second phase of the larger project of the construction of mixed-use facilities on 270 ha of land.

Includes the development of commercial space, retail areas, a hospital, a shopping mall and an international school.

Duqm Development Company 2020 500

16

The Residences at Mandarin Oriental Muscat First high-end branded residence in Oman with apartment sizes ranging from 75 to 260 sq m.

Eagle Hills Muscat 2021 155

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

Muscat

Integrated Residential Complex in Oman Bausher Ash Sharqiyah

Rimal 2 to be spread across 44,000 sq m offering 1-3 bed apartments.

Starting price of apartments is OMR 38,995 and commercial units are available from OMR 27,995.

Oman Supreme Council for Planning 2021 148

Ad Dakhiliya

Habitat in Al Khuwair Al Khuwair The 75,000 sq m project is a mix of for-sale residential, commercial, and open-air restaurants anchored with unique retail spaces.

Al Wusta

The residential units are spread between 97 and 322 sq m whilst the office units are between 58 and 295 sq m.

Tasmim 2021 44

Ras Al Hamra Residential Development Project (Phase 5) Ras Al Hamra The 281-ha RAHDP masterplan is divided into five phases.

Once complete, the development will have 1,067 units to accommodate 4,000-5,000 employees of Petroleum Development Oman (PDO) and their families.

Dhofar

Petroleum Development Oman (PDO) 2022 800

Madinat Al Irfan (Masterplan) Muscat Mixed-use community spans over 4.5 million sq m.

Consists 100,000 sq m of retail and 700,000 sq m of office space apart from residences.

Oman Tourism Development Company (Omran) 2021 More than 11,000 residential units Developer

Expected completion year

Number of units 17

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

OFFICE MARKET OVERVIEW

Against the backdrop of the tepid economic environment combined with Oman’s protectionist policies, a number of enterprises have found it difficult to sustain.

According to Invest Easy, a Ministry of Commerce and Industry (MOCI) platform established for the quick and easy set up of companies, between 2016 and 2019, the total number of registered enterprises decreased from 38,070 in 2016 to 21,913 enterprises in 2019, recording a negative CAGR of 17%. However, compared to 21,235 enterprises in 2018, the number increased in 2019, registering a year-on-year growth of 3%.

Interestingly, the small and medium enterprises sector has thrived over the years, with the number of SMEs registered in the Riyada Public Authority of Small and Medium Enterprise Development growing nearly 15% from 36,821 enterprises in 2018 to 42,163 enterprises in 2019.

To meet demand from this segment and the overall need for low-cost commercial space, flexible workspace providers and coworking companies are responding with the opening of new or additional business centres. In 2019, leading global workspace provider Regus announced the opening of its sixth business centre in Oman‫ز‬.

In November 2019 the government also introduced the Foreign Capital Investment Law to incentivise investments from foreign players into Oman to stimulate local growth. Implemented in January this year, the law will ensure more money stays within the local economy, which would be utilised to enhance the economy and the people’s standard of living.

OFFICE RENTS IN MUSCAT (PER SQ M PER MONTH)

Seeb/Airport Heights OMR 4-8

18

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

NUMBER OF REGISTERED ENTERPRISES IN OMAN 2016-2019

21,913

21,235

25,569

38,070

3-year CAGR: -17%

40,000 35,000

5%

3%

0%

0% -5%

30,000

-10%

25,000

-15%

-17%

20,000

-20%

15,000

-25%

10,000

-30%

-33%

-35%

5,000

2016

2017

2018

Number of registered enterprises

2019 Y-o-Y growth

Qurm OMR 5-8

Shatti Al Qurm OMR 5-10

Ruwi/Wattaya OMR 2-4

Azaiba

Ghubrah

OMR 4-8

OMR 4-9

Al Khuwair/Bausher OMR 4-7

Ghala OMR 4-7

19

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

OFFICE UPCOMING SUPPLY

iTower Office Building Bausher Seven-storey tower 17,454 sq m development Gulf Muscat United 2020 71 offices sized between 42 sq m and 1,550 sq m

Muscat Hills : Business Tower One Muscat Seven-storey tower with 3 basement levels 32,000 sq m land area and 2,000 sq m build up area Muscat Golf Course Project Company 2020 Spaces ranging from 70 sq m to 500 sq m

Taj Office Building Ghala 12-storey solar-powered project Built up area at 3,942 sq m Teejan Investment and Development Company 2020-2021 3,942 sq m

Integrated Light Industries City (Masterplan) Muscat Sandan City - the first integrated city for light industries in Oman Plot size 250,000 sq m and built up area 320,000 sq m Over 2,400 shops, 400 offices and 1,800 residential units Muscat Golf Course Project Company 2020 2000 sq m land area and 2000 sq m build up area

2021

Developer 20

Expected completion year

Area

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

21

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

RETAIL AND ENTERTAINMENT MARKET OVERVIEW

Oman’s retail sector may currently be under pressure with rapid construction of new malls across the country. adding further pressure on the supply side.

However, over the longer term, innovative retail concepts and online shopping are expected to drive growth in the sector.

Similar to trends in other regional markets, e-commerce continues to grow at a rapid pace, despite in-store retail dominating the landscape. One of the highest mobile penetration rates in the world coupled with a growing youth population that is tech-savvy has helped enhance the popularity and growth potential of online retail.

With an aim to expand offerings beyond traditional retail, some malls are introducing entertainment facilities to cater to the evolving needs of visitors. An example is the Oman Aquarium which opened up in the Mall of Muscat in 2019. With over 30,000 marine animals and 1,000 types of fish spread over three floors, it is the largest aquarium in the Middle East.

To provide visitors and shoppers with a unique shopping experience in Muscat, Oman has planned night markets in at least four areas of the capital – Muttrah, Seeb, Bausher and Al Amerat. The move was aimed to re-ignite business activity in these locations, whilst providing growth opportunities to SMEs and employment opportunities for Omanis.

An upcoming project to watch out for is the Village Square in Muscat Bay. Extending over 1,640 sq m, the new Village Square will include facilities such as restaurants, cafes, a supermarket, a gym and retail stores. The development is expected to be completed this year.

22

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

RETAIL RENTS IN MUSCAT (PER SQ M PER MONTH)

Ma’abela

Seeb

Al Khoudh

OMR 4-7

OMR 8-15

OMR 9-15

Mawaleh South OMR 9-16

Shatti Al Qurm OMR 10-20

Qurm OMR 10-20

Ruwi OMR 6-10

Bausher OMR 8-12

23

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

RETAIL AND ENTERTAINMENT UPCOMING SUPPLY

Barka Marina Barka Phase 1: Fish, meat and vegetable market, management centre, cold stores, hypermarkets, healthcare clinic, closed and open recreational facilities.

Stage 2: Event and family entertainment hall, shopping mall and cinema halls.

Stage 3: Hotel and private beach, resort, residential units, marina for 80 yachts, water sports centre.

Al Siyabi Stage 1 and 2 - 2020 | Stage 3 - 2022

Mina Al Sultan Qaboos (Phase 1) Sultan Qaboos Port, Muscat Integrated mixed-use waterfront destination to include business and residential zones, a destination mall, six hotels, recreation facilities and docking facilities for cruise liners and yachts.

Omran and DAMAC International 2020

Oman Renaissance Museum Nizwa Design includes three interconnected elements: the Plinth, containing the museum’s facilities; the Gardens, a series of hidden oasis and the Jewel Box, containing the museum’s main galleries.

Oman Royal Court Affairs 2020

24

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

Muscat Bay’s Village Square Muscat Bay Restaurants, cafes, retail stores, supermarket, gym and parking capacity for 81 cars.

Saraya Holdings and Omran 2020

Mall of Oman Muscat 145,000 sq m of retail space with 350 outlets, Oman’s largest Vox Cinemas, Magic Planet family entertainment centre, Carrefour hypermarket and the largest indoor snow park in the country.

Majid Al Futtaim 2021

Hayy Al Sharq Barka Mixed-use development including three hotels, retail and residential areas, an integrated theme park, wildlife park, water park, an equestrian center and an edutainment centre.

National Development and Investment Company (ASAAS) 2022

Developer

Expected completion year

25

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

HOSPITALITY MARKET OVERVIEW

According to Omran, the executive arm of the government for tourism development, the country’s hotel capacity has expanded over 80% in just under a decade in order to accommodate a thriving tourism and hospitality industry.

Visitor numbers have displayed stable growth from 3 million in 2016 to 3.3 million in 2017 and 2018.

With 2.3 million of these being overnight visitors in 2018, Oman is preparing to offer plenty of hotel supply across categories to cater to the varied needs of tourists.

Oman also secured the 58th place among 140 nations in the 2019 Global Travel and Tourism Competitiveness Report by the World Economic Forum, moving up eight spots from the previous ranking achieved in 2017. The biennial study measures the factors and policies that enable the sustainable development of the sector, and thereby the wider economy.

As of December 2019, total occupancy rates in 3-5 star-hotels was 65.8% compared to 66.1% in December 2018 showing a slight decrease. However, during the same period revenues rose 6.5% from OMR 25.7 million in December 2018 to OMR 27.4 million in December 2019.

As of 2018, hotel establishments in Oman stood at approximately 412 including 23 hotels in the 5-star category. According to Oman’s Ministry of Tourism (MoT), 31 hotels were expected to open in the country in 2019, adding a total of 3,264 rooms to the market.

HOTEL GUESTS IN OMAN BY NATIONALITY AS OF DECEMBER 2019 Americans 4%

Oceanian 1%

Other Arabs 3%

Africans 1%

Others 4% GCC Nationals 9%

183,870

Europeans 37%

Asians 14%

Omani‫سس‬s 27% 26

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

27

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

HOSPITALITY UPCOMING SUPPLY

Al Mouj Rayhaan by Rotana Al Mouj, Muscat Accommodation ranges from luxurious rooms and suites to hotel apartments.

Aloft Hotel Near Muscat International Airport Hotel will introduce Aloft brand to Oman and help meet the demand for infrastructure development.

Golden Group Holding and Rotana

New Rotana Enterprises

2021

2020

251

204

Swiss-Belinn Muscat

Studio M Boutique Hotel

Azaiba

Seeb

3-star hotel near Muscat International Airport offering an all-day-dining restaurant, meeting space, gym, Wi-Fi access and 24-hour room service.

Muscat Shaden is Millennium Hotels and Resorts’ first Studio M property in Oman. Located in Al Hail District, the hotel will be spread across six floors.

Al Salaam International Hotel

Al Madina Real Estate

2020

2020

128

302

Mandarin Oriental Hotel

Avani Muscat Hotel

Shatti Al Qurm

Seeb

Featuring five restaurants and bars, the Spa at Mandarin Oriental and an outdoor swimming pool.

To be built over two phases and will include an all-day dining restaurant, Avani Pantry, rooftop lounge, eight meeting rooms, 1,000 sq m ballroom, swimming pool and health club.

Eagle Hills Muscat 2021 150 rooms and suites | 156 residences

Minor Hotels and Safari International Group 2020 160 rooms and suites | 90 serviced apartments

28

OMAN

First InterCityHotel

PROPERTY MARKET REPORT 2O19–2O2O

Jumeirah Muscat Bay

Al Khuwair

Bandar Jissah

Rooms set across six floors along with a restaurant and bar.

Talise Spa, bars, restaurants, conference and banquet facilities, dive centre, watersports and kids club.

Deutsche Hospitality 2020

Jumeirah Group

285

2020 206

Marriott St Regis Al Mouj Corporate facilities, restaurants, VIP lounge, business centre, deluxe wellness centre, spas and health club.

Dhabab Resort Qurayat Two swimming pools, spa, playground and multi-use halls with a capacity of 120 guests per room.

Marriott International

Oman’s Ministry of Tourism

2022

2020

271 luxury rooms | 170 branded residences

Developer

Expected completion year

92

Number of keys

29

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PROPERTY MARKET REPORT 2O19–2O2O

INDUSTRIAL MARKET OVERVIEW

Compared to 2018, the total number of businesses in industrial estates such as Al Rusayl, Suhar, Raysut, Sur, Nizwa, Buraimi and Al Mazunah recorded yearly growth ranging from 4% in Raysut to over 100% in Al Mazunah.

The Public Establishment for Industrial Estates - Madayn, which manages and operates the industrial cities, also recorded 60% completion of the construction of Phase 2 of Al Mazunah Free Zone. The establishment was set up with the intention to develop and position Oman as a leading regional centre for manufacturing, ICT, innovation and entrepreneurship excellence.

INDUSTRIAL ESTATE DISTRIBUTION Total sq m rented and available by governorate

Al Rusayl Industrial Estate Al Rusayl OMR 1* 10,859,175 4,217,296 1,736,100 309

Raysut Industrial Estate Raysut OMR 1* 3,810,479 2,890,186 217,822 202

Suhar

Sur Industrial Estate Sur OMR 1* 36,100,000 6,657,386 17,003,814 134

OMR 1* 21,237,225​ 10,906,748 5,844,506 354

Buraimi Industrial Estate

Nizwa Industrial Estate

Buraimi

Nizwa

OMR 1* 5,561,156 2,019,794 2,676,871 461

OMR 1* 3,111,295 2,026,851 551,426 141

Rent per sq m per annum

Total area sq m

Area available for investment/lease sq m

*

Rented area sq m

Number of exisiting businesses

Common Area Maintenance service is provided

30

Suhar Industrial Estate

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

To attract and retain investors, Madayn provides incentives including exemption from tax on net profit for a period of five years for industrial projects; exemption from customs duties and taxes on production inputs; provision of developed and equipped lands with basic services; 24/7 operation possibility in Madayn’s cities; cooperation from government bodies through Masar Investment Window; lease period of lands and facilities for up to 30 years, renewable for the same period; right to sell and lease the buildings on the leased land and the right to involve new partners in the lease contract, among others.

Recently, the Sohar Port and Freezone, which is among the four freezones in Oman marked 15 years of service.

Nearly 62% of Oman’s total imports entered through the port and freezone in 2017, alongside 42% of the country’s exported volumes. In the same year, it also contributed to 4.8% of Oman’s total GDP.

Al Mazunah Industrial Estate

Knowledge Oasis Muscat

Mazunah

Knowledge Oasis Muscat

Shops and land available for rent. Rent ranges from 250 bissa to OMR 3 per sq m.

OMR 7–9 778,602

15,362,305

Office: 44,109 sq m Lease contracts for office spaces last for three renewable years

3,239,286 760,714 236

Samail Industrial Estate Samail

L​and: 304,284 sq m Land contracts last for 30 renewable years 208

OMR 1* 7,674,457 2,665,508 1,819,398 166

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OMAN

INDUSTRIAL UPCOMING SUPPLY

Al Hadeetha Copper Mining & Copper Concentrated Plant (Masterplan) Nizwa Sinaw highway, 160 km from Muscat Al Hadeetha Investments and Al Tasnim Infrastructure Services 2019 OMR 27 million

Duqm Power and Desalination Plant Duqm Special Economic Zone, Duqm Oman Oil Company and Gulf Pacific Holding Company Initial phase in 2020 OMR 185 million

Oman - Qatar Bus Assembly Project Sezad Karwa Motors 2020 OMR 104 million across all phases

Khazaen Economic City (Phase 1) Barka Phase 1 to include the first dry port in Oman, a free zone, and logistics and industrial complexes.

Oman Global Logistics Group 2020 First contract worth OMR 9.2 million awarded for infrastructure works

Gabbro Quarries Development Project Khatmat Milaha Qatar Primary Materials Company 2021

Duqm Refinery Project (Masterplan) Duqm Primarily designed to produce and recover naphtha, jet fuel, diesel, and LPG, the Duqm refinery will include units for hydrocracking, hydrotreating, delayed coking, sulfur recovery, hydrogen generation and Merox treating.

Duqm Refinery and Petrochemical Industries Company 2020–2021 OMR 3.5 billion

Developer 32

Expected completion year

Investment

PROPERTY MARKET REPORT 2O19–2O2O

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

33

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

MARKET SPOTLIGHT

From a small fishing settlement to an industrial oil town The Special Economic Zone Authority (SEZAD) manages, regulates, and develops all economic activities in Duqm. It plans, designs, and implements long-term strategies for infrastructural development and attracts investments to promote a wide spectrum of economic activities.

Musandam Khasab

Al Buraimi

Key among development plans in Duqm is utilising its strategic location not only for economic activity but to also increase tourism within the area. Duqm boasts beautiful beaches and moderate weather and SEZAD has taken numerous initiatives to spur tourism investments.

In 2019, SEZAD was granted powers of “Authority for Electricity Regulation” and will regulate electricity and water.

Total Area (SEZAD): 2,000 sq km (the biggest economic zone in the Middle East) Available Units: Residential, commercial, industrial, free-zone (SEZAD)

Development

Unit type

No. of BDR

No. of units

Monthly rent range (OMR) Minimum

Duqm Frontier Town Say Village

34

Al Batina

Maximum

Apartment

1

250

660

660

Townhouse

3, 4

94

1,600

1,640

Apartment

1,2,3,4

20-40 per building

200

500

Villa

3,4

170

350

500

OMAN

Private sector organisations contributed over OMR 5.4 billion to projects in Duqm during 2018.

Numerous projects in Duqm have moved to construction phase securing Oman’s non-oil future.

Renaissance Village, a key project, is self-sufficient and can house up to 16,200 workers.

PROPERTY MARKET REPORT 2O19–2O2O

DUQM UPCOMING SUPPLY Little India ITC 600,000 leasable

Population projected to increase drastically with the development of large industrial, commercial and residential projects.

In 2004 the Duqm International Airport was established offering direct services with Oman Air to Muscat.

Plans are underway to develop a railway network— Oman Mineral Railway Plan—connecting different regions including SEZAD

2030-2035 OMR 288 million

Oman Wanfang LLC 40,000 2035 OMR 390 million

Al Madina Real Estate Company 741,000 Not Decided

Muscat

OMR 283 million

Ash Sharqiyah

Al -Hassad Investment Fund Under construction

Ad Dakhiliya Ad Dhahirah

Al Wusta

Dhofar

Total area (sq m) Expected completion year Estimated Investment

35

OMAN

PROPERTY MARKET REPORT 2O19–2O2O

A WORD FROM OUR

CHIEF ECONOMIST Astute Omani real estate investors are focused now on the answers to four important questions.

First, what is the correlation between economic diversification and current real estate performance? Macro-economic indicators— growth in particular—are likely to turn in less impressive results in the short-term when a government pursues diversification from hydrocarbons into other industries, especially if this is combined with an emphasis on readjusting local labour markets away from JULIAN ROCHE dependence on expatriates. This applies even to industries that have CHIEF ECONOMIST regional comparative advantage, such as tourism, where Oman has a head start. The evidence from the Omani market, judging from cautious recent revival, is that this reset has now been thoroughly priced in, with the market returning to fundamental trends, hence the recovery in transaction volumes and even residential prices in some districts last year. The actual impact of diversification, however, is yet to be experienced. We could call these three phases together the Tanfeedh effect.

Second, what will be the short-term impact of major long-term development projects? Khazaen Economic City, Mina Al Sultan Qaboos Waterfront and the Quriyat ITC Project – all of these have a development timeframe of more than 15 years, most probably 20 by the time all stages are mostly completed. There is room for more generous visa treatment of investors and opportunities for the extension of the Free Zone rules currently applicable in Duqm. Evidently, even significant growth in future supply will not negatively affect prices if sufficient market confidence exists, which is the case in some sectors such as logistics and tourism—numbers here were up by double-digits last year.

Third, what is the impact of the government’s budget deficit? Certainly, the rating agencies were not kind last year, worried by debt-GDP metrics and the government’s expanded infrastructure programme. But real estate investors have reason to evaluate macroeconomics more broadly, incorporating forecasts of interest rates, unemployment and economic growth, rather than concentrating on government deficits. Even the IMF now expects the deficits to moderate over the next five years with a gradual reduction in the rate of increase of external debt and a decline in the current account deficit .

Finally, from the standpoint of early 2020, naturally there is concern over the impact of the Coronavirus. Judging from the economic impact of SARS, escalated for the rise in China’s global economic footprint since then, as well as greater globalisation, economic projections will certainly have to be revised downwards. But analysts need to be careful in their assessments of where the impact will be most keenly felt, and when: most Omani tourism comes from the Gulf, for example, not from Asia-Pacific, although the oil price has for the time being dipped lower than 2019 forecasts on which ratings were based. Government expenditure has already been focused on infrastructure that will support the real estate market and if global markets slow still further, the Omani government will take compensating action. It is a complex, and currently evolving, macroeconomic picture.

Omani real estate investors will not be celebrating for some time yet. But careful attention to the macroeconomics of the market will pay off.

1

https://www.imf.org/en/News/Articles/2019/07/03/pr19266-imf-executive-board-concludes-2019-article-iv-consultation-with-oman

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PROPERTY MARKET REPORT 2O19–2O2O

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PROPERTY MARKET REPORT 2O19–2O2O

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STRATEGIC CONSULTING AND RESEARCH Cavendish Maxwell’s Strategic Consulting and Research team has some of the region’s most highly qualified data analysts with a wealth of international real estate advisory experience. We work closely with a broad portfolio of banks, property developers, government entities and private clients, providing authoritative, industry-specific research and advice to maximise portfolio performance.

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PROPERTY MARKET REPORT 2O19–2O2O

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Aditi Hariharan Associate Partner Strategic Consulting and Research

Khalil Alzadjali Head of Oman

DUBAI

ABU DHABI

SHARJAH

MUSCAT

2205 Marina Plaza Dubai Marina P.O. Box 118624 Dubai United Arab Emirates T: +971 4 453 9525

605 West Tower, Abu Dhabi Mall Tourist Club Area P.O. Box 126609 Abu Dhabi United Arab Emirates T: +971 2 448 4677

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Disclaimer: The information and analysis contained in this report is based on information from a variety of sources generally regarded to be reliable, and assumptions which are considered reasonable, and which was current at the time of undertaking market research, but no representation is made as to their accuracy or completeness. We reserve the right to vary our methodology and to edit or discontinue the indices at any time, for regulatory or other reasons.

The report and analysis do not purport to represent a formal valuation of any property interest and must not be construed as such. Such analyses, including forward-looking statements are opinions and estimates only, and are based on a wide range of variables which may not be capable of being determined with accuracy. Variation in any one of these indicators can have a material impact on the analysis and we draw your attention to this.

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