Haider Al Lawati - haiderdawood@hotmail.com - Under many headlines, the international news agencies and Arab and foreign newspapers recently reported the decision to open the doors to real estate investment for expatriates living in the Sultanate. Social media posted different views of Omani youth. Two months ago, the government, represented in Oman’s Capital Market Authority, announced the opening up of real estate market for expatriates residing in the Sultanate.
CMA issued the Administrative Decision No (2/2018) on adopting the executive regulations for REITs, which will allow residents in Oman, whether citizens or expatriates, to purchase a share in real estate development projects in Muscat Securities Market, similar to the purchase of shares in the stock market.
According to CMA’s statement, these funds would be subject to regulation and supervision as well as market regulations and disclosure requirements.
Investment rules also direct the managers of funds to invest in existing properties, in addition to investments in properties of a commercial nature, which may be residential/commercial, industrial or touristic.
In the same context, the Ministry of Housing issued the Ministerial Decision No (95/2017) in November last year the rules for real estate investment funds’ ownership of properties in the Sultanate.
The decision permits real estate ownership through purchase except in the ban areas identified by MoH, stipulating that real estate ownership shall be limited to commercial, residential/commercial, industrial and touristic lands, along with existing residential complexes with a minimum area of 10,000 square metres.
It is not permissible to own agricultural real estate and land space. Undoubtedly, the regulation of real estate investment funds is a positive step towards contributing to the activation of an important financing tool that will pave the way for a large section of the community to contribute to and benefit from real estate activity in the Sultanate.
These funds will be available to the public on the basis that a part of the capital shall be subject to public or private subscription as set forth in the regulations, which shall contribute to its detailed provisions to attract more foreign capital and employ it for the benefit of revitalising the real estate sector.
The requirements for activating the work of these funds have been set, including that the minimum capital in any real estate investment fund shall not be less than RO 10 million due to the nature of investment in real estate activity, which usually requires large sums of money.
The fund, set for public offering and special purpose owned company must distribute at least 90 per cent of its annual net profit among the holders of its investment units. The funds will be exempt from the income tax law.
The rules allow bulk of the fund’s money to be invested in the Sultanate by 75 per cent of the total value of its assets. The fund’s founders are entitled to invest no more than 25 per cent of the total value of its assets outside the Sultanate.
It is hoped these funds will contribute to attracting more foreign capital and employing it to boost the real estate sector as per the steps taken by the Sultanate to diversify the sources of national income.
This positive step is a channel to support the investment trends in the country and enable citizens and residents to invest their money in certain real estate projects so that expatriates can own 40 per cent of the units in any of the permitted large real estate complexes.
This will help attract more foreign investments as well as investment of expatriate funds in the country, thereby reducing the value of annual remittances abroad.
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