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Oman's property market is experiencing strong momentum in 2025, driven by economic diversification, robust foreign investment, and favorable government policies.
Property prices have surged 7.3% year-on-year in the first quarter of 2025, with the residential market projected to reach $7.42 billion by 2030. Rental yields in prime areas like Muscat range from 6% to 9%, while the government maintains investor-friendly tax policies including zero capital gains tax and no property taxes for residential investments.
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Oman's property market shows strong growth potential with 7.3% price increases in Q1 2025 and rental yields of 6-9% in Muscat.
The government's Vision 2040 economic diversification plan, combined with zero property taxes and favorable financing options, creates an attractive investment environment for both local and foreign buyers.
| Market Indicator | Current Status (Sept 2025) | Outlook |
|---|---|---|
| Property Price Growth | +7.3% year-on-year Q1 2025 | Continued growth driven by demand |
| Rental Yields (Muscat) | 6-9% annually | Strong yields maintained |
| Market Value Projection | $4.78 billion (2025) | $7.42 billion by 2030 |
| New Supply | 5,500 units expected 2025 | 62,800 units planned by 2030 |
| Vacancy Rate (Offices) | 5% in Muscat | Tight market conditions |
| Mortgage Rates | 4-6% typical range | Competitive financing available |
| Tax Environment | Zero property/capital gains tax | 5% income tax from 2028 (high earners) |
How are property prices trending in Oman over the past 12 to 24 months?
Property prices in Oman have shown impressive growth momentum over the past two years.
Residential property prices jumped 7.3% year-on-year in Q1 2025, with apartment prices soaring 17% in the same period. Villa prices climbed 6.4% as of May 2025, particularly in central Muscat locations. Over the last three years, the market has recovered strongly from 2022 lows, with total prices rising approximately 60%.
The price growth has been driven by economic diversification under Oman's Vision 2040, increased foreign investment following relaxed ownership laws, and growing demand from both expatriates and local buyers. Some governorates like central Muscat have experienced even stronger appreciation, while peripheral areas like Al Buraimi saw moderate declines.
Land values have been a significant contributor to overall price increases, reflecting strong underlying demand for development opportunities. The trend shows particular strength in premium developments and Integrated Tourism Complexes where foreign ownership is permitted.
As of September 2025, market experts predict continued upward price pressure through the remainder of 2025 and into 2026.
What rental yields are investors currently seeing in Muscat and other major cities?
Rental yields in Oman's major cities offer attractive returns for property investors.
In Muscat, rental yields for apartments range from 6% to 9% annually, with prime central locations achieving the highest returns around 8.5%. Properties in Al Mouj and The Wave developments consistently deliver yields at the upper end of this range due to their premium positioning and high expatriate demand.
Villas in Muscat generate slightly lower but still competitive yields of 4.5% to 5.5%, particularly attractive for investors seeking long-term capital appreciation alongside rental income. Furnished apartments tend to outperform unfurnished properties, with yields reaching up to 7% in well-located developments.
Other major cities like Salalah and Sohar typically see rental yields between 5% and 8%, depending on property type and specific location. Salalah benefits from seasonal tourism demand during the Khareef season, while Sohar's industrial growth supports steady rental demand.
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How much new housing and commercial supply is expected to come onto the market this year and next?
Oman's construction pipeline shows substantial new supply planned for 2025 and beyond.
| Supply Type | 2025 Expected Delivery | 2025-2030 Total Pipeline |
|---|---|---|
| Residential Units | 5,500 units | 62,800 units |
| Hotel Rooms | 2,800 rooms | 16,500 rooms |
| Office Space | 120,000 sqm | 480,000 sqm |
| Retail Space | 85,000 sqm | 380,000 sqm |
| Mixed-Use Developments | 8 major projects | 25 major projects |
| Luxury Developments | 12 projects | 45 projects |
| Tourism Complexes | 4 ITCs | 18 ITCs |
Most new residential supply is concentrated in Muscat, Al Batinah, and Dhofar governorates, with major projects like AIDA and Al Mouj expansions leading development activity. The government's focus on affordable housing initiatives aims to balance luxury developments with mid-market options for local buyers.
What is the current level of demand from expatriates versus local buyers and tenants?
Expatriate demand remains the primary driver of Oman's property market activity.
Expatriates constitute approximately 44% of Oman's population, with Muscat alone hosting over 1.8 million foreign residents. This massive expatriate population creates sustained rental demand, particularly for premium properties in Integrated Tourism Complexes and well-located apartment developments.
Foreign buyers have increased their property purchases by 30% in 2023, largely concentrated in designated freehold areas where full ownership is permitted. The relaxation of ownership laws has opened doors for international investors, with particular interest from Indian, Pakistani, and Bangladeshi nationals who form the largest expatriate segments.
Local Omani demand has also strengthened, buoyed by economic reforms, population growth of 2.0% annually, and government initiatives to promote homeownership. Young Omani professionals increasingly seek modern living standards in developments like Qurum and Al Mouj.
The market benefits from both segments, with expatriates driving rental demand and purchase activity in premium segments, while locals focus on affordable to mid-market properties supported by government housing programs.
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How is the government's economic diversification plan affecting real estate activity?
Oman's Vision 2040 economic diversification strategy significantly boosts real estate investment and development activity.
The government's shift toward non-oil sectors, aiming for 90% of the economy to be non-oil based by 2040, has created substantial demand for commercial, hospitality, and residential properties. Tourism development alone has driven hotel guest numbers up 3.6% in 2024, with over 3.5 million visitors by November.
Infrastructure investments worth $235 billion across transport, logistics, and urban development directly support property values by improving connectivity and accessibility. Major projects include port expansions at Duqm and Sohar, highway developments, and the planned Muscat metro system.
Special Economic Zones and Free Zones offer enhanced incentives for property developers and investors, including corporate tax exemptions up to 25 years and duty-free import privileges. The $4 billion Trump-branded development and $25 billion Sultan Haitham City expansion exemplify large-scale projects driven by diversification goals.
Vision 2040 has also encouraged private-public partnerships in real estate development, attracting international developers and funding sources while maintaining government oversight of strategic projects.
What financing options and mortgage rates are available, and how accessible are they for locals and expats?
Financing accessibility in Oman has improved significantly, with competitive rates available for both residents and expatriates.
- Mortgage rates typically range from 4.0% to 6.0% annually, with some lenders offering rates as low as 3.75% for qualified borrowers
- Down payment requirements start at 20% of property value, though some lenders accept 10% for qualified applicants
- Financing terms extend up to 25 years for residential properties, with some banks offering 30-year terms for premium borrowers
- Expatriates require residence permits and minimum monthly salaries of OMR 500, while Omani nationals need OMR 325 minimum income
- Developer financing plans offer alternative payment structures, particularly for off-plan purchases in major developments
Major banks including Bank Muscat, Bank Dhofar, and Oman Arab Bank provide competitive mortgage products. Expatriates with high salaries above OMR 3,500 can access Debt Burden Ratios up to 75%, enhancing purchasing power for premium properties.
Non-resident financing remains challenging, with most banks requiring local employment and residence permits, though high-net-worth individuals may secure case-by-case approvals.
What are the average vacancy rates for apartments, villas, and office spaces in Muscat and secondary cities?
Vacancy rates in Oman show significant variation between property types and locations.
Office vacancy rates in Muscat remain exceptionally tight at just 5%, among the lowest in the regional markets and well below the 20% regional average. This reflects strong commercial demand and limited available Grade A office space, supporting rental growth of 16.7% over the past year.
Residential vacancy presents a more complex picture, with estimates suggesting up to 20% of Muscat's total housing stock remains vacant. However, this figure masks significant variation by location and quality, with premium areas like Al Mouj and Muscat Hills experiencing near-zero vacancy while lower-demand developments face higher vacancy rates.
Apartment vacancy rates dropped approximately 5% in 2024 overall, indicating improving market absorption. Villa markets show stronger occupancy in established developments, with overall residential occupancy averaging 85.2% across the Sultanate.
Secondary cities generally report higher vacancy rates than Muscat, though these are stabilizing as infrastructure improvements and economic diversification create new employment centers outside the capital.
How are infrastructure projects such as airports, ports, and highways influencing property demand?
Major infrastructure developments serve as powerful catalysts for property demand across Oman.
Airport improvements have boosted tourism significantly, with passenger traffic growing 2% year-on-year to 1.13 million passengers in June 2025. The expansion of Muscat International Airport and planned development of six additional airports by 2030 enhance accessibility and support tourism-related property development.
Port developments at Duqm, Sohar, and Salalah create industrial and commercial demand, with the Duqm Special Economic Zone attracting $52 billion in investment commitments. These port cities see increased demand for both residential and commercial properties as employment opportunities expand.
Highway projects worth $780 million across all governorates in 2024 improve connectivity between major cities and previously isolated areas. The Batinah Expressway completion and ongoing dualization projects like Izki-Nizwa road ($121.7 million) make peripheral locations more attractive for development.
The planned national railway connecting to GCC countries and Muscat metro system will further enhance connectivity, with property values already rising in anticipation near planned stations and transport hubs.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Oman versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What tax policies or incentives are currently in place for property buyers and investors?
Oman maintains one of the most investor-friendly tax environments in the Gulf region for property investment.
- Zero capital gains tax on property sales for individual investors, significantly enhancing investment returns
- No inheritance tax and low property transfer fees of just 3%, reducing transaction costs
- 5% VAT applies only to commercial property transactions; residential property remains completely exempt
- No property taxes on residential real estate ownership, unlike many international markets
- Special Economic Zones offer additional benefits including corporate tax exemptions up to 25 years for qualifying developments
A new 5% personal income tax will take effect in 2028 for high earners above OMR 50,000 ($130,000) annually, but this affects minimal property investors and includes significant exemptions. The maximum rate was reduced from initially proposed 15% to just 5%, maintaining Oman's competitive tax position.
Free zones provide comprehensive tax holidays, duty-free import/export treatment, and tax-free profit repatriation for investors in designated areas. These incentives particularly benefit large-scale property developments and international investors establishing regional operations.
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How does Oman's property market compare with neighboring Gulf countries in terms of returns and risk?
Oman offers a balanced risk-return profile that appeals to stability-focused investors compared to higher-growth, higher-risk Gulf neighbors.
| Country | Rental Yields | Risk Profile |
|---|---|---|
| Oman | 6-8% | Moderate/Low |
| UAE (Dubai) | 5-6% | Moderate/High |
| Qatar | 4-6% | Low |
| Saudi Arabia | 5-7% | Moderate |
| Kuwait | 4-5% | Low/Moderate |
| Bahrain | 5-6% | Moderate |
While Dubai and some Saudi markets offer higher short-term returns, Oman provides steady long-term capital appreciation with less exposure to speculation and market volatility. The sultanate's neutral foreign policy and political stability reduce geopolitical risks compared to some regional markets.
Oman's tax advantages, including zero capital gains tax and no property taxes, often result in superior net returns despite moderate gross yields. The market's lower liquidity compared to Dubai is offset by reduced competition and more stable pricing cycles.
What are analysts and real estate agencies forecasting for capital appreciation over the next 3 to 5 years?
Market forecasts indicate strong growth potential for Oman's property sector through 2030.
The residential market is projected to grow from $4.78 billion in 2025 to $7.42 billion by 2030, representing a compound annual growth rate (CAGR) of 9.19%. This growth trajectory is supported by continued economic diversification, infrastructure development, and expanding expatriate population.
Prime locations in Muscat, particularly Al Mouj and integrated developments, are expected to see annual capital appreciation of 3% to 7% through 2025-2027. Luxury villa markets show even stronger potential, with some developments projecting 5% to 8% annual appreciation.
Coastal tourism areas like Salalah benefit from growing visitor numbers, with tourism increasing 8.7% in 2024 alone. Property values in tourism zones are forecast to appreciate 4% to 6% annually as the government targets 6 million tourists by 2030.
Overall market value is expected to reach $6.23 billion across all segments by 2028, underpinned by steady demographic growth and continued government investment in infrastructure and economic development.
What risks—economic, regulatory, or geopolitical—could negatively impact the property market outlook in Oman?
Several key risks could potentially impact Oman's property market performance, though most remain manageable within current market conditions.
- Economic dependency on oil prices continues despite diversification efforts, with volatile energy markets potentially affecting broader economic confidence and government spending capacity
- Oversupply risks exist in certain segments, particularly lower-grade apartment developments outside prime locations where vacancy rates remain elevated
- Regulatory changes including the planned 2028 personal income tax could affect expatriate demand, though the 5% rate and high threshold limit impact
- Regional geopolitical instability could reduce capital inflows and expatriate immigration, particularly affecting rental demand in premium segments
- Project delivery delays or concentration in poorly-connected developments could dampen returns for investors in peripheral locations
Market liquidity remains lower than mature markets like Dubai, potentially complicating exit strategies for investors seeking quick sales. However, the secondary market is gradually improving with increased transaction activity and better price transparency.
Currency risks are minimal due to the Omani Rial's stability, while the government's strong fiscal position and conservative approach to debt limit systemic financial risks.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Oman's property market presents compelling opportunities for both lifestyle and investment buyers in 2025, with strong fundamentals supporting continued growth.
The combination of government-led diversification, infrastructure development, favorable tax policies, and growing expatriate population creates a solid foundation for sustainable property market expansion through 2030.
Sources
- Real Estate - Oman | Statista Market Forecast
- 13 strong trends for 2025 in the Oman property market – Sands Of Wealth
- Yes, property prices will rise in Oman in 2025 – Sands Of Wealth
- Residential Real Estate Market in Oman - Report, Companies & Analysis
- 15 statistics for the Oman real estate market in 2025 – Sands Of Wealth
- Top 10 Reasons Property Prices in Oman Are Rising in 2025
- Oman Real Estate Market Performance 2024 and Future Outlook | Insights | Cavendish Maxwell
- Oman's infrastructure push is vital for economic turnaround | AGBI
- Oman makes key changes to draft income tax law | AGBI
- Investing in Oman: The Complete Guide for 2025 - InvestAsian
-Oman Property Taxes and Fees Guide
-Can Foreigners Buy Property in Oman?
-Complete Guide: How to Buy a House in Oman
-Average Property Prices in Oman by City
-Average Rental Prices Across Oman
-Can Foreigners Buy Land in Oman?
-Oman Residence Visa Through Property Investment