While the housing market across the northern border in Dubai was dubbed second-hottest in the world recently by Forbes magazine, Oman remains an affordable option for expats looking to buy a house with a bit of luxury and plenty of amenities, and less of the noise and madness of the UAE.
The housing market in Oman, as in the rest of the world, suffered a drastic retraction following the 2008 financial meltdown – by 2010, house prices have fallen by an average of 25 percent. But since 2010, the market has been steadily getting stronger, and both rentals and sales are fetching higher prices in 2013 than 2012.
Since the Omani rial is pegged to the U.S. dollar, investors continue to have confidence in the value of their homes. In addition, Oman has embarked on a wide-ranging infrastructure program that should boost property values in and out of Muscat. The Oman Vision 2020 plan includes investment of $6.5 billion annually in investment projects, $4.2 billion for airport expansion, $1.3 billion on road projects, $1.3 billion into seaports, $1.2 billion in utilities, and $1.2 billion in housing.
In March, the country’s housing ministry released $104 million in interest-free loans for low-income residents. The government is also seeking foreign investment in the housing market, with multinational banks like HSBC able to pre-approve certain types of properties for expats.
Expected to grow in particular are the Integrated Tourism Complexes (ITCs), such as the Wave, Salalah Beach Resort, Barr Al-Jissah, Yiti Resort, Muscat Hills, Blue City and Jebel Sifah. Since their introduction in 2004 as a way for foreigners to purchase property, ITCs have been proliferating in several areas in and around Muscat, and demand for them continues to rise as more and more expats find work in Oman, in part because property owners automatically get residency visas, as do their families, upon completion of the purchase. (They are allowed to sell the property in case of deportation, however). Demand remains healthy both for new units still in developments and in the secondary market.
ITCs (unlike Integrated Real Estate Developments, which are only open to Omani nationals) are required by law to provide certain types of amenities, such as restaurants, supermarkets, hotels, security and recreation facilities. This means that ITCs do come with high maintenance fees – but many start as low as 59,000 OMR (around $150,000), although the typical starting price is closer to 100,000 OMR. For a five-bedroom villa, you can expect to pay about 400,000 OMR.
Current regulation allows home loans of up to 25 years for townhouses and up to 10 years for apartments. Mortgage rates start as low as 4.75% and are available for people earning from OMR 300 to 500 per month. Registration fees and purchase taxes are around 2 to 3%, paid by the buyer. And the competition among banks has led to the approval period behind shortened, now typically taking about two weeks. And for those whose fortunes turn around for the better, banks in Oman typically take a 1% penalty fee for early repayment.