A cautious response has greeted a ministerial decree that allows expatriates to own real estate in designated tourism-related areas.

An informal announcement of the law was made in February last year by Mohsin Bin Khamis Al Balushi, tourism undersecretary in the Ministry of Tourism, when the Wave project was launched. Now, the Ministry of Housing, Water and Electricity has circulated the law.

"We will have to wait for a final detailed draft of the law, which should be ready by the end of this year," said Michael Lowes, general manager of Cluttons, which has done a study for client Al Futtaim.

The new law allows individual expatriates, foreign investors and corporate entities to buy property only in the tourism-designated area. The Wave is the only tourism-related project that offers residential property.

"Oman is an ideal place for Europeans to look as an alternative place for a holiday home," Lowes said. He suggested more effort is needed to popularise the place.

He hopes that such projects as the Wave and Bur Al Jizza will show Oman as a place worth investing when looking at holiday homes. Lowes sees potential downfall in the rental market because expatriates could go in for buying property rather than renting.

Omani broker Munir Ahmad Sulaiman, Proprietor of First Choice LLC, termed the proposed 20 per cent levy to be charged to expatriates for reselling the property a "dangerous move."

"The proposed tax would make property 20 per cent more expensive for a foreigner straightaway," he said.

He also pointed out that as far as his information was concerned, a site in upmarket Shati Qurum and another in Seeb were also permitted to sell property to foreigners.

Munir said that difficulties in reselling would make only a few foreigners buy property here.

"I reckon that it is not a very exciting or attractive proposal for expatriates," he said.

Sudhakar Reddy, general manager of Al Habib Estate Agents, said restricting the sale of property to foreigners in tourism-related areas would not prove to be a major restrictive factor.

"The area of the Wave is as good as any other area in the capital," he said. Reddy also does not see a sudden boom in property market as in the neighbouring UAE.

"There would be a trickle, not a boom, in the estate market due to this new law," he said.

What it means to potential investors

  • The real estate bought should be developed within a maximum period of four years from the date of purchase.
  • The government will repossess the property at the price of purchase or the price of the property determined in a public auction, whichever is lower if it is not developed within the scheduled time.
  • Owners will have the right to sell their real estate.