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Oman's property market is experiencing a remarkable turnaround after years of decline, with prices rising significantly across major cities in 2025.
The Sultanate's residential sector shows strong momentum driven by Vision 2040 infrastructure projects, foreign investment incentives, and growing demand that outpaces new supply. Current market conditions favor both investors seeking rental yields and buyers looking for long-term appreciation in this strategically positioned Gulf market.
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Oman's property market has rebounded strongly in 2025 with Muscat apartment prices rising up to 17% annually after several years of decline.
The country faces a significant housing shortage with only 5,500 new units planned for 2025 against rapidly growing demand, creating favorable conditions for property investors.
| Market Indicator | Current Status | Forecast Trend |
|---|---|---|
| Property Price Growth | +7.3% to +17% (2025) | Continued growth 2025-2030 |
| New Units (2025) | 5,500 residential units | 62,800 units by 2030 |
| Muscat Price/sqm | $2,080-$6,750/sqm | Premium locations rising |
| Rental Yields | 4-7% average | Stable to improving |
| Foreign Buyers | 25-30% of transactions | Increasing with freehold zones |
| Mortgage Rates | 4-6% typical range | Competitive regional rates |
| Supply vs Demand | Shortage emerging | 340,000 unit deficit by 2040 |
What has been the average annual growth rate of property prices in Oman over the past five years?
Oman's residential property market experienced a dramatic turnaround from decline to strong growth over the past five years.
Property prices fell sharply by 10-15% annually during 2020-2022, reflecting economic pressures and market corrections following earlier overheating. However, the market reversed course dramatically in 2024 and 2025.
As of September 2025, property prices are rising 7.3% year-on-year nationally, with Muscat apartments and land showing even stronger gains of up to 17% in 2025. Prime areas in the capital have seen the most significant appreciation.
Calculating the five-year average, the market likely achieved 2-4% annual growth when offsetting the earlier declines with recent strong performance. This reflects a classic recovery pattern where initial losses are followed by robust rebounds.
The current growth trajectory suggests Oman's property market has entered a new expansion phase supported by economic diversification and infrastructure investment.
How many new residential units are expected to be completed in Oman in the next two years, and how does that compare with demand?
Oman faces a significant supply-demand imbalance in residential housing that favors property investors and buyers.
The country is expected to deliver approximately 5,500 new residential units in 2025, with similar numbers planned for 2026 as part of the broader national housing strategy. This is part of an ambitious plan to add 62,800 residential units by 2030.
However, demand substantially exceeds this supply pipeline. Population growth, urbanization trends, and economic diversification are driving housing needs faster than construction can keep pace. Current projections indicate a potential housing shortfall of up to 340,000 units by 2040 if 90% occupancy rates are to be maintained.
The immediate two-year outlook shows new supply of roughly 11,000 units (2025-2026) against rapidly growing demand from both domestic population growth and increasing foreign resident numbers. This supply constraint is a key factor driving current price appreciation.
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What is the current average price per square meter for apartments and villas in Muscat, and how does that compare to secondary cities like Sohar and Salalah?
Property prices in Muscat command a significant premium over secondary cities, reflecting the capital's economic importance and limited supply in prime areas.
| Location | Property Type | Price per sqm (USD) |
|---|---|---|
| Muscat (ITCs/Freehold) | Prime Apartments | $2,080 - $2,860 |
| Muscat (Luxury) | Branded Apartments | $3,380 - $6,750 |
| Salalah | City Center Apartments | ~$988 |
| Sohar | Residential Properties | $800 - $1,200 |
| Muscat (Standard) | Regular Apartments | $1,500 - $2,000 |
| Secondary Cities | Villas | $600 - $1,000 |
| Muscat | Premium Villas | $2,500 - $4,000 |
How has rental yield evolved in Oman's main property markets over the past three years, and what is the current average yield percentage?
Rental yields in Oman have shown resilience and improvement as the property market recovers from earlier weakness.
Over the past three years (2022-2025), rental yields initially remained stable around 4-5% as both property prices and rental rates were relatively flat. However, as property prices began rising in 2024-2025, yields have compressed slightly in prime areas while improving in emerging neighborhoods.
Current average rental yields across Oman's main markets range from 4% to 7%, depending on location and property type. Muscat city center properties typically yield 4-5%, while suburban areas and secondary cities like Sohar and Salalah can achieve 6-7% yields.
The best yields are found in well-located apartment buildings serving the growing expatriate workforce, particularly in areas with good transportation links to employment centers. Mixed-use developments also tend to outperform purely residential properties in terms of rental returns.
As property prices continue rising, investors should expect yields to moderate slightly in prime areas, though overall rental demand remains strong due to population growth and economic expansion.
What percentage of total property transactions in Oman are driven by foreign buyers, and which nationalities dominate?
Foreign buyers represent a significant and growing segment of Oman's property market, particularly following recent regulatory changes that expanded foreign ownership rights.
Approximately 25-30% of total property transactions in Oman currently involve foreign buyers, with this percentage increasing notably in freehold zones and Integrated Tourism Complexes (ITCs) where full foreign ownership is permitted.
The dominant foreign buyer nationalities include Indians, Pakistanis, Bangladeshis, and other South Asian nationals who represent a large portion of Oman's expatriate workforce. Additionally, investors from other GCC countries, particularly UAE and Saudi Arabia, are active in the luxury and commercial property segments.
European buyers, while smaller in number, tend to focus on high-end residential properties and vacation homes, particularly in coastal areas like Muscat and Salalah. British, German, and French nationals are most commonly represented among European buyers.
The expansion of freehold ownership areas under Vision 2040 is expected to attract more international investment, potentially increasing foreign buyer participation to 35-40% of transactions in designated zones by 2030.
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How is the government's Vision 2040 plan expected to influence real estate demand, especially in terms of infrastructure and freehold zones?
Vision 2040 is the primary catalyst driving current and future real estate demand in Oman through massive infrastructure investment and regulatory reforms.
The plan includes over $190 billion in planned infrastructure spending through 2040, covering new cities, transportation networks, ports, and economic zones. Major projects like the New City of Sohar, expansion of Muscat International Airport, and the Oman Rail network will create new residential and commercial demand centers.
Freehold zone expansion is particularly significant for real estate investors. Vision 2040 designates multiple new areas where foreigners can own property outright, including designated urban developments in Muscat, Sohar, Salalah, and emerging tourism zones along the coast.
The government targets attracting 11.7 million tourists annually by 2040, driving demand for hospitality, vacation rental, and mixed-use properties. New tourism developments along the Musandam Peninsula and Dhofar region are expected to create significant investment opportunities.
Economic diversification efforts under Vision 2040, including logistics, manufacturing, and technology sectors, will increase expatriate workforce numbers and generate sustained residential rental demand in key employment centers.
What are the current mortgage interest rates in Oman, and how affordable is property financing compared to household income levels?
Mortgage financing in Oman remains relatively accessible compared to many regional markets, though rates have risen from historic lows.
Current mortgage interest rates in Oman typically range from 4% to 6% for qualified buyers, depending on the bank, loan terms, and applicant profile. National and international banks operating in Oman offer competitive rates, with some Islamic financing products available at similar pricing.
Property financing affordability varies significantly by income segment and nationality. Omani nationals generally access more favorable terms and higher loan-to-value ratios (up to 80-90%), while expatriates typically qualify for 70-80% financing with stricter income requirements.
For median household incomes in Oman (approximately 800-1,200 OMR monthly), property financing remains challenging for prime Muscat properties but accessible for apartments in secondary locations or smaller cities. The debt-to-income ratios required by banks typically limit monthly payments to 50% of gross income.
Recent economic improvements and salary increases in key sectors have improved affordability for middle-income buyers, particularly first-time homebuyers benefiting from government support programs.
How do vacancy rates in commercial real estate compare with residential vacancy rates today?
Oman's commercial and residential property sectors show different vacancy patterns reflecting distinct market dynamics and demand drivers.
Residential vacancy rates in prime areas of Muscat and other major cities are relatively low, typically ranging from 5-8%, indicating healthy demand-supply balance. However, some older residential complexes in less desirable locations may experience higher vacancy rates of 10-15%.
Commercial real estate vacancy rates vary significantly by sector and location. Office space in Muscat's central business district maintains occupancy rates of 85-90%, while secondary office locations may see vacancy rates of 15-20%. Retail vacancy rates have improved as the economy recovers, with major shopping centers achieving 90-95% occupancy.
Warehouse and logistics properties show the strongest fundamentals with vacancy rates below 5% in key locations, driven by Oman's strategic position as a regional logistics hub and the growth of e-commerce.
The residential market generally outperforms commercial in terms of occupancy stability, making it attractive for investors seeking consistent rental income. Industrial and logistics properties offer the lowest vacancy rates but require higher capital investment.
It's something we develop in our Oman property pack.
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 are the projections for population growth and urbanization in Oman over the next decade, and how will that impact housing demand?
Oman's population growth and urbanization trends are creating sustained housing demand that outpaces current supply planning.
The country's population is projected to grow from approximately 4.6 million in 2025 to 5.4-5.8 million by 2035, representing annual growth of 2-3%. This includes both natural population increase among Omani nationals and continued expatriate workforce expansion as economic diversification accelerates.
Urbanization is accelerating, with over 85% of the population expected to live in urban areas by 2035, compared to approximately 80% today. Muscat metropolitan area is projected to grow from 1.6 million to 2.2 million residents by 2035, requiring significant housing stock expansion.
Secondary cities like Sohar, Salalah, and Sur are also experiencing rapid growth due to industrial development and tourism expansion under Vision 2040. These cities may see population increases of 40-60% over the next decade.
The housing demand impact is substantial: current projections suggest Oman needs to add 25,000-30,000 residential units annually to keep pace with population growth, well above the current planned supply of 5,500-8,000 units per year. This supply-demand gap supports continued property price appreciation and strong rental demand.
How do Oman's property tax policies, fees, and transaction costs compare to neighboring markets like UAE and Saudi Arabia?
Oman maintains a relatively favorable tax environment for property investors compared to many regional markets, though transaction costs can be significant.
| Cost Component | Oman | UAE | Saudi Arabia |
|---|---|---|---|
| Property Tax | None for individuals | None | None for individuals |
| Transfer/Registration Fees | 3% of property value | 4% (Dubai) / 2% (other emirates) | 3% of property value |
| Agent Commissions | 2-3% (buyer/seller split) | 2-5% typically | 2-3% typically |
| Legal/Admin Fees | 0.5-1% of value | 0.5-1% of value | 0.5-1.5% of value |
| Capital Gains Tax | None for individuals | None | None for individuals |
| Annual Property Fees | Municipality fees vary | Service charges vary | Municipality fees vary |
| Total Transaction Cost | 5.5-7% typical | 6.5-10% typical | 5.5-8.5% typical |
What percentage of new projects are mixed-use developments, and how are they performing relative to purely residential projects?
Mixed-use developments represent a growing share of Oman's new construction and generally outperform purely residential projects in both sales velocity and investment returns.
Approximately 35-40% of new major developments in Oman incorporate mixed-use elements, combining residential, retail, office, and sometimes hospitality components. This percentage is higher in prime urban areas like Muscat, where land values justify more intensive development.
Mixed-use projects consistently achieve higher sales prices per square meter (typically 15-25% premium) compared to similar purely residential developments. They also tend to sell faster, with absorption rates 20-30% better than comparable residential-only projects.
From an investment perspective, mixed-use developments offer several advantages: diversified rental income streams, lower vacancy risk, and higher long-term appreciation potential. Properties in mixed-use developments typically achieve rental yields 0.5-1% higher than purely residential equivalents.
The strongest performing mixed-use developments are those anchored by major retail components or business centers that create sustained foot traffic and economic activity. These projects benefit from both residential rental demand and commercial space appreciation.
Future development trends favor mixed-use projects as Vision 2040 emphasizes creating integrated communities rather than single-use developments.
What do international property consultancies forecast for Oman's real estate sector growth in 2025-2030?
International property consultancies are increasingly bullish on Oman's real estate prospects, citing structural reforms and Vision 2040 implementation as key growth drivers.
Knight Frank projects annual property price growth of 5-8% for Muscat residential properties through 2030, with premium segments potentially achieving higher appreciation. They emphasize the supply-demand imbalance as a key factor supporting sustained growth.
CBRE forecasts transaction volume growth of 10-15% annually through 2030, driven by increased foreign investment, economic diversification, and population growth. Their analysis suggests the commercial real estate sector will particularly benefit from logistics and industrial development.
JLL expects Oman's real estate investment volumes to double by 2030 compared to 2025 levels, with particular strength in hospitality, mixed-use developments, and logistics properties. They project rental yield stability in the 5-7% range for well-located properties.
Consensus among major consultancies indicates Oman offers one of the more attractive risk-adjusted return profiles in the GCC region, with lower entry costs than UAE or Qatar but similar long-term growth potential driven by economic transformation.
The outlook remains positive but contingent on successful Vision 2040 implementation and continued economic diversification away from oil dependency.
It's something we develop in our Oman property pack.
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 investors and residents in 2025-2030, with strong fundamentals supporting continued growth.
The combination of supply constraints, Vision 2040 infrastructure investment, and expanding foreign ownership rights creates a favorable environment for property investment in this strategically positioned Gulf nation.
Sources
- Omnia Capital Group - Top 10 Reasons Property Prices in Oman are Rising
- Sands of Wealth - Oman Price Forecasts
- IFP Info - Oman to Add 62,800 New Homes by 2030
- Arab News - Business Economy
- Cavendish Maxwell - Oman to Deliver 62,800 Residential Units by 2030
- DXB Off Plan - Properties for Sale in Salalah
- Zawya - Oman to Receive 63,000 New Residential Units by 2030
- Global Property Guide - Oman Price History
- Bayut Oman - 6 Bedroom Villas for Sale
- Numbeo - Property Investment in Oman