Oman's market opening produces big real estate projects

Oman, running low on oil, opened its real estate market to foreign ownership in 2006, part of a plan to diversify the economy and expand the country's housing stock.

The decision appears to have been a success, producing major projects like Al Madina Al Zarqa, or The Blue City, a 200,000-resident city designed by Foster + Partners, the British architectural firm; Salam Yiti, a $1.7 billion development stretching from a marina to mountain villas; and The Wave, a 4,000-residence site being built along a strip of beach in the capital, Muscat.

Sales to both locals and foreigners have been brisk.

"We've been taken back by the interest so far," said Nick Smith, chief executive of The Wave, which has sold 700 homes so far. "Our offerings are always oversubscribed. During our last sales release we put 70 homes on the market, 150 people queued outside overnight to buy. We were sold out in an hour and a half."

The Wave does have an unusual selling point: beach villas in a capital city. Many of the homes are on man-made islands - about 20 percent of the site, which totals 2.5 million square meters or 26.9 million square feet, is reclaimed land - giving the development the shape of a giant wave.

But the other developments also have their attractions, according to Blair Hagkull, managing director for Middle East and Africa at Jones Lang LaSalle real estate in Dubai.

"Oman's emergence as a attractive housing market is new but it is catering to a distinct niche," Hagkull said, offering luxury and lifestyle options. "Oman offers a strong point of difference and has shown itself able to attract a premium market."

Prices in Oman are still lower than in many Western markets. Properties at The Wave, for example, sell for about 250,950 Omani real, or $650,000, for a 307-square-meter villa or 150,570 real for a 185-square-meter townhouse, according to Jones Lang LaSalle.

Oman's property developers are leveraging the country's natural variety, which is rare in the Middle East. There are deserts, a coast lined with coral reefs and mountains that, occasionally, are snow topped. So, for example, the Salam Yiti development includes both houses along the beach and 140 meters up into the hills.

Much of the country is still undeveloped. Until the 1960s, Oman had only 10 kilometers, or 6 miles, of paved roads and, under a conservative ruler, was one of the most reclusive countries in the Middle East. Since 1970, under Oman's current, more liberal-minded sultan, Qaboos ibn Said, development has been brisk.

Planners, however, intend to keep Oman's distinctive building style - a simple, almost modernist, look with Arabic detailing like shuttered windows and pointed arches.

Gerard Evenden, lead architect and senior partner at Foster + Partners, is heading the design team for Al Madina Al Zarqa and has been working directly with Oman's heritage minister. The team includes a specialist in Islamic art and it is using local stones, ceramics, colors and patterns.

"We wanted to play around a little with the rules of Islamic art, to create something which builds on Oman's terrific building heritage but translates it into a modern language," Evenden said.

The city is being built along a strip of desert by the sea, about 90 kilometers west of Muscat, and everything from a university to fire stations will be built over the next 10 to 15 years. It is, by far, the largest project in Oman, which has a population of slightly more than 3.2 million.

Many smaller projects also are being planned or in construction; last year a local business magazine listed 22. And there is demand for that construction, according to Harry Goodson-Wickes, sales chief at Cluttons & Partners Oman, a real estate agency in Muscat. In the capital, he said, rents have doubled, with Jones Lang LaSalle figures showing a two-bedroom apartment renting for 350 to 450 reals a month.

The government has capped rent increases and now is said to be planning minimum lease periods of four years for residential property and seven years for business property in an attempt to control increases.

Oman's growing economy, including the expansion of tourism, banking and ports, as well as the manufacturing sector, is creating strong demand for housing in larger cities, real estate specialists say.

At The Wave, about 50 percent of the sales were to Omanis, about 25 percent to expatriates living in Oman, and the rest to other foreigners, according to executives.

Demand is also being fueled by population growth, which has risen sharply with a life expectancy now at 75 and about a third of the population younger than 15.

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