Like other nations in the GCC, Oman also wants to diversify its economy and looks to other sectors such as transport, tourism, and real estate. Any development in these sectors will have a direct impact on the construction sector and it shall benefit most from the diversification plans. Oman’s construction sector has grown from USD 4.9 billion in 2013 to USD 5.2 billion in 2014 and an estimated USD 5.6 billion in 2015.The construction sector in Oman is growing at a rapid pace now and is projected to reach USD XX billion by 2021 at a CAGR of X%. Greater exposure to trade, attractive investment environment, competition, and diversification are factors affecting the growth of this market.
The government’s investments in sectors like rail, air, sea infrastructure and overall development of tourism and transport are driving the construction sector in Oman. Plans for new national rail networks are at full pace, with the first phase connecting Muscat and UAE nearing completion. Huge investments have been made to develop a new port city project at Sohar Port.
The demand for private real estate, with many projects like shopping malls, grade-A office spaces, integrated tourism complexes, etc. is driving this sector.
Restraints and Challenges
Oman’s biggest weakness is their dependence on hydrocarbons. The money that is needed to diversify and expand other sectors comes from their oil and gas segment. The dip in oil prices had a direct impact on the construction sector. The other gulf countries have a lot to offer in comparison to Oman and foreign companies prefer them. Currently, the government is putting its best efforts by relaxing regulations to attract foreign investment. Other hindrances include political instability and inexperienced labor.
Oman’s population is constantly on the rise due to both high birth rates and expatriate arrivals. Analysts in the real estate sector see this as an opportunity as there will be growth in demand for family apartments and units, gated communities, office spaces etc. Moreover, the government is investing highly in tourism development, which has led to huge investments in building hotels etc. Healthcare is another sector where the government allocated more than USD two billion to build medical city complexes. The investment climate within the country encourages foreign investment through various incentives.
Key Deliverables in the Study