MUSCAT, SEPT 21
Property developers in Oman’s special economic zones and free zones must meet a threshold equivalent to 20 per cent of a project’s total cost before marketing units off-plan or accepting reservation payments, under the new executive regulation of the Law of Special Economic Zones and Free Zones. The law was issued by Royal Decree 38/2025.
The value of construction work already completed counts towards the threshold. Developers are separately barred from using the project escrow account to raise financing for the development, so any remaining amount needed to meet the 20 per cent threshold must come from the developer’s own resources or external borrowing before any money is taken from buyers.
Developers may not advertise off-plan units to the public by any means or accept reservation payments before obtaining approval from the Public Authority for Special Economic Zones and Free Zones (OPAZ) or the entity responsible for managing, operating and developing the economic zone concerned.
Approval also requires proof that an escrow account has been opened in the project’s name with a bank licensed in Oman, engineering plans showing the number, location and area of the units, evidence that a consultant and contractor have been appointed and a copy of the proposed marketing or advertising material.
The regulation caps spending from the escrow account on marketing or advertising at 3 per cent of the amounts held in the account.
A separate provision requires developers to retain at least 5 per cent of the sale value of each unit in the escrow account for one year from the date the unit is registered in the owner’s name. The retained amount is intended to cover proper execution of the project and the repair of construction defects that may emerge after completion.
Release of the retained amount after the one-year period requires an application by the developer to the bank, supported by a certificate signed by the unit owner, the project consultant and the developer confirming that the unit is free of construction defects. OPAZ may instruct the bank not to release the money where the buyer and developer are in dispute over such defects.
An escrow account and an escrow agreement with the bank are mandatory wherever a development involves the sale of units off-plan or the collection of money from buyers before completion. Payments made by buyers, together with funds the developer obtains to finance the project, must be deposited in the account, which is dedicated to that development.
Withdrawals must correspond to actual construction progress and be supported by a certificate from the project consultant. The account cannot be closed without OPAZ approval and OPAZ or the zone operator may instruct the bank to withhold payments where there are grounds to do so.
Funds in the escrow account cannot be used to finance another project or meet obligations unrelated to the development.
The regulation also sets a 10,000-square-metre minimum land area for a licensed real-estate development project, although the OPAZ board may grant an exception for projects that contribute to local content. Eligible land must be designated for residential, commercial, mixed residential-commercial or tourism use and the built-up proportion must comply with ratios set by the authority.
Applicants must demonstrate the financial capacity to execute the project, submit an overall planning drawing for approval and provide a copy of the escrow agreement.
Applications for a real-estate development licence must be decided within 15 working days once all required information and documents have been submitted. Unlike project licences elsewhere in the regulation, failure to respond within that period is deemed a rejection rather than an approval. Refusals must be reasoned and may be appealed to the OPAZ chairman within 60 days.
Where additional documents are requested, applicants have 30 days to supply them. If they do not, the application is deemed cancelled.
Licensed developers must file quarterly reports on project progress and unit sales, obtain approval for any change to approved plans and notify the authority of anything likely to delay or stall the project.
If a project does stall for any reason, the developer must submit a full report on the causes within 30 days. OPAZ is then required either to identify a remedy allowing the project to be completed or to refer the matter to the competent court.
The Real Estate Regulation Law issued by Royal Decree 79/2025 applies to development projects in the zones for issues not provided for in the regulation.
The executive regulation was issued under OPAZ Decision 81/2026 and published in Official Gazette No 1666. It takes effect on the day following publication. Entities covered by its provisions, including developers already marketing units off-plan in the zones, have up to six months from the date it comes into force to bring their status into compliance.
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