Prime assets anchor Oman property market shift

Oman’s real estate sector is entering a more mature and disciplined phase, underpinned by structural reforms, evolving investor preferences and steady non-oil economic growth. The market is increasingly transitioning away from speculative activity towards income-generating, demand-led assets with stronger fundamentals.
This shift reflects a broader recalibration in both investor strategy and market dynamics. In an exclusive interview, Michael O’Connell of Hamptons International, a highly experienced RICS chartered surveyor and asset management professional, highlighted the emergence of a more transparent, resilient and institutionally aligned property market in the Sultanate of Oman.
STRUCTURAL SHIFT TOWARDS MATURITY
According to O’Connell, Oman’s property sector is undergoing a fundamental transformation. “The real estate market is entering a more mature, fundamentals-driven phase, shifting away from speculative development toward income-generating, demand-led assets with strong cash flow visibility,” he said.
This transition is being supported by improvements in regulatory alignment, governance and transparency, all of which are strengthening investor confidence. At the same time, emerging frameworks such as real estate investment trusts (REITs) and the proposed International Financial Centre of Oman are expected to deepen liquidity and broaden the investor base.
Supporting this shift, Oman’s non-oil GDP is estimated to have grown by around 3–4 per cent in 2025, driven by logistics, tourism and manufacturing — key sectors underpinning real estate demand. Population growth in urban centres, particularly Muscat, has also remained steady, reinforcing demand for residential and mixed-use developments.
O’Connell also pointed to the growing role of technology and sustainability. “ESG considerations and AI-driven analytics are increasingly embedded in valuation and investment decisions, influencing pricing, risk, and long-term performance,” he noted.
FLIGHT TO QUALITY DEFINES INVESTMENT STRATEGY
A defining feature of the current cycle is the clear outperformance of prime assets. Investors are increasingly prioritising stability, quality and long-term income over speculative gains.
“The outperformance of prime, income-generating assets is being driven by a clear flight to quality,” O’Connell said. “Investors and lenders prioritise stable long-term cash flows, strong covenant profiles, and asset resilience in a more disciplined market environment.”
Prime Grade A office yields in Muscat are currently estimated in the range of 7 to 8 per cent, remaining attractive compared to more mature regional markets. At the same time, rental levels across secondary assets have shown limited growth, highlighting the widening performance gap.
This divergence is further reinforced by tighter financing conditions and heightened scrutiny around asset performance. As a result, market participants are becoming more selective, focusing on well-located, professionally managed assets with sustainable income streams.

DISTINCT REGIONAL INVESTMENT PROFILES
Oman’s key real estate hubs — Muscat, Duqm, Suhar and Salalah — are evolving along distinct trajectories.
Muscat remains the most mature and liquid market, accounting for an estimated 60–70 per cent of total real estate transactions in the Sultanate of Oman. Its stability continues to attract investors seeking lower-risk exposure.
Duqm, by contrast, represents a long-term, infrastructure-driven opportunity. Backed by multi-billion-dollar investments in the Special Economic Zone, the area continues to see growing demand for industrial land and logistics facilities.
Suhar is emerging as a strong logistics and industrial hub, supported by port activity and manufacturing demand. “Suhar is increasingly attractive from a logistics and industrial perspective, offering strong income-led opportunities,” O’Connell said. Industrial occupancy levels in key zones are estimated to be above 80 per cent, reflecting sustained demand.
Salalah presents a hybrid growth story, combining tourism-led development with logistics expansion. Tourist arrivals in Dhofar continue to rise seasonally, supporting hospitality and retail real estate performance.
POLICY REFORMS BOOST INVESTOR SENTIMENT
Government reforms and policy initiatives are playing a pivotal role in reshaping Oman’s real estate landscape.
“Government reforms and foreign ownership policies are materially reshaping investor sentiment, moving the market toward a more internationally investable proposition,” O’Connell explained.
The expansion of foreign ownership in Integrated Tourism Complexes, alongside incentives such as 100 per cent foreign ownership in free zones, is strengthening investor confidence. Free zones in Duqm and Suhar are driving demand for logistics, industrial and workforce housing assets.
Foreign direct investment inflows into Oman have shown steady growth, with real estate and related sectors forming a key component of capital deployment, particularly from GCC investors.
RISKS AND OPPORTUNITIES AHEAD
Despite the positive outlook, the market faces near-term challenges, particularly around liquidity and supply-demand balance.
“Liquidity remains relatively thin, which can limit exit depth for larger transactions, while supply-demand mismatches in certain segments risk short-term oversupply,” O’Connell cautioned.
Interest rate sensitivity and financing conditions continue to influence deal flow, particularly for leveraged investors. However, the opportunity set remains compelling.
Institutional investors are targeting prime assets such as Grade A offices, logistics facilities and well-located retail developments, where yields remain attractive relative to regional peers. Meanwhile, growth corridors linked to Duqm and Suhar continue to offer strong fundamentals.
For private investors, Oman still presents value-driven entry points, with potential for medium-term capital appreciation as the market continues its transition towards a more institutional, globally competitive real estate sector.
Overall, Oman’s property market is increasingly anchored by fundamentals, with quality assets, policy support and disciplined investment strategies shaping its next phase of growth.