This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 11/19/2018

Overview
As the largest segment of the non-oil economy, construction remains a pillar of government efforts to steer the country away from oil dependence. Despite public investment cutbacks in the wake of lower oil prices, Oman’s construction sector continues to grow, largely driven by the private sector taking advantage of the lower construction costs. Although the outlook for 2018 remains positive, companies will have to implement cost efficiencies in order to remain competitive in what has now become a price sensitive market. 

As of October 2017, 11 PPP projects worth approximately two billion dollars were in various stages of planning and execution in the Sultanate, according to the Middle East Economic Digest (MEED), a business intelligence outfit that tracks construction projects across the Middle East. At the same time, just under a third (30 percent) of all construction projects tracked by MEED Projects are currently under execution. A further 22 percent have yet to be awarded, while the remainder are either completed, on hold, or cancelled.

As the Omani government’s fiscal situation tightened in 2016 and 2017, some construction companies complained about long delays in the payments of invoices. “Omanization” workforce restrictions, which require firms to hire minimum quotas of Omani nationals, also plague the sector.

Leading Sub-Sectors
According to a MEED project award tracker, the most active sub-sector has been commercial schemes, which accounted for 29 percent of total awards 2012-2017. Mixed-use projects were the next most significant, with 16 percent of the total, followed by residential schemes (12 percent), public sector projects (10 percent) and hospitality projects (9 percent).

Opportunities
Industry experts expect several projects currently on hold to resume, especially large infrastructure, energy, and power projects. In terms of future prospects outlined by MEED, the most active construction market segment by far is the mixed-use sector. This is in large part due to the development of Duqm’s New Town, which includes a wide-ranging plan to transform the area into a commercial, industrial and tourism center by 2020.

According to an August 2017 MEED report, Oman’s Tender Board approved 15 construction contracts worth OMR 5.7 million (USD 14.8 million), following previous contracts worth a combined OMR 20.6m (USD 53.5 million) and OMR 61million (USD 158.4 million), respectively. These contracts spanned multiple government ministries and ranged from building roads and dams to office buildings and housing complexes. The state-owned oil firm Petroleum Development Oman (PDO) is building the USD 1.25 billion Rabab Harweel Integrated Project, which is expected to be finished in 2019, as well as the USD 900 million Yibal Khuff project. In August 2017, the first phase of the Duqm oil refinery project saw three multibillion-dollar EPC contracts awarded.

In March 2017, construction began on Mall of Oman, a 135,000-square-meter (sqm) space that will become the largest mall in the country when it opens in 2020. The Oman Aquarium will span across three floors and cover 8,000 square meters, and will be located at the Palm Mall, which is scheduled to open in late 2018. Al Araimi Boulevard in Al Khoud, spread over 147,200 square meters, is scheduled to open for the public in September 2018. Developers are also moving beyond Muscat to capitalize on the growth in other Omani cities. A new mall opened in Sur in 2018 and another one in Sohar is expected to open later in the year.
Oman’s tourism investment and promotion arm (known as OMRAN) is planning Madinat al-Irfan, a new downtown area for the Muscat capital district, covering an area of more than 4.5 million square meters. OMRAN has selected Dubai’s Damac Properties as its joint venture partner to develop Port Sultan Qaboos Waterfront project, a one billion dollar project to transform the old port area of Muscat into an Integrated Tourist Complex (ITC) with hotels, residences, and retail space. The Ministry of Tourism has announced it will build 17 tourism “stations” around the country, each comprising an information center, hotel, restaurant space, petrol station, and prayer rooms.

Vision 2040 outlines plans to spend OMR 80 million (USD 207 million) a year on affordable housing to close the country’s housing gap.  The government is developing more than 5,000 homes in collaboration with private developers in ITC projects such as the Diyar Ras Al Hadd Resort, Quriyat Integrated Project, Naseem Al Sabaah Project, and Al Nakheel Project.  To boost investment in Oman’s real estate sector, the Capital Market Authority (CMA) of Oman issued the regulatory framework in January 2017 for the introduction and trading of real estate investment trusts (REITs) on the Muscat Securities Market.

Web Resources
Duqm Special Economic Zone Authority
OMRAN
Oxford Business Group
MEED Projects
International Exhibition for Infrastructure & Industrial Projects
 

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