Oman is opening up its real estate market to foreign investors further by allowing them access to a wider selection of residential properties as part of reform measures aimed at improving the country's fiscal position.
The move is outlined in the Sultanate's Medium-Term Fiscal Plan, which also confirmed it is looking at introducing a personal income tax on higher earners.
"The Ministry of Housing and Urban Planning is adopting a package of measures that will work to revive the real estate market in the Sultanate," according to the plan.
This includes "opening the door to non-Omanis to own real estate residential units in multi-storey commercial residential units in certain areas".
Non-GCC nationals can currently buy property in Oman, but only within integrated tourism complexes (ITCs) such as the Al Mouj and Muscat Hills resorts in the capital and the Salalah Beach Resort. There are 13 ITCs in the Sultanate, according to the tourism ministry's website.
The new rules grant rights "to own limited lands and properties within multi-storey buildings", explains Aditi Gouri, head of strategic consulting and research at Cavendish Maxwell.
"There are still certain restrictions, whereby the percentage of sale to expats should not exceed 40 per cent of the units in a commercial and residential building, or 20 per cent of a single nationality," she said.
Other measures aimed at improving the property market include licensing rent-to-own schemes and allowing payments by instalments.
The real estate market in Oman has "been under pressure since 2015," as a result of lower oil prices and has been affected further by the Covid-19 pandemic, according to Matthew Wright, head of consultancy at Savills Oman.
"Residential rental values in Muscat dropped by an average of 30-40 per cent from 2014 to 2019 and have seen further reductions of 10-20 per cent over the course of 2020," he said.
One key difference with the proposed rules is that residential properties within ITCs provide residency rights, but buying outside will not, which could limit their appeal, Mr Wright said.
"We understand that the Ministry of Housing & Urban Planning may re-assess whether purchasing a property outside an ITC project should include residency rights for non-GCC nationals in the future," he said.
Oman's Medium Term Fiscal Plan sets out a series of measures aimed at reducing the Sultanate's budget deficit by cutting spending and diversifying revenues. Alongside proposals for the income tax on higher earners, Oman will introduce VAT at a rate of 5 per cent from April next year, improve tax administration and collection and look to improve returns from state-owned companies.
Reforms to the labour market are proposed to make it more flexible and the Sultanate is planning to allow visa-free entry to more than 100 nationalities to boost tourism.
Oman's economy is projected to shrink 10 per cent this year and 0.5 per cent in 2021, according to the International Monetary Fund's latest forecasts. The fund estimates the Sultanate will run a fiscal deficit of 18.3 per cent this year and that its debt-to-GDP ratio will rise to 81.3 per cent by the end of the year.
According to the government's Medium-Term Fiscal Plan, efforts already undertaken to cut government spending by 10 per cent this year will help reduce the budget by 870 million Omani rials ($2.26bn). Cutting water and electricity subsidies to zero by 2024 in line with the fiscal plan, will help the sultanate reduce spending by 2.07bn rials and increase revenue by 1.39 billion rials.
By adopting measures in the plan, the sultanate hopes to be able to keep debt-to-GDP at about 80 per cent by 2024. Without the measures, it forecasts an increase in the ratio to 128 per cent.