The Fight for Affordable Housing in Muscat, Oman

Oman is a little country of 4 million people in the Middle East, quiet and unassuming. For several decades, Oman has been a monarchy that is surrounded by tense countries such as Saudi Arabia, Yemen, Iran, and Pakistan and has yet secured a name for being one of the most liveable and peaceful countries in the Middle East. One of the biggest issues that several locals and expatriates in the capital, Muscat, struggle with everyday is a result of the ill conceived planning that silently advocates for automobile usage and auto-oriented development.

By regional standards, Oman has a relatively diversified economy, but remains dependent on oil exports. Tourism is the fastest-growing industry in Oman. Other sources of income, agriculture and industry, are small in comparison and account for less than 1% of the country’s exports, but diversification is seen as a priority by the government (Bin Said). Oil is extracted and processed by a solitary organization with proven oil reserves holding approximately steady (CIA World Factbook). The Ministry of Oil and Gas is responsible for all oil and gas infrastructure and projects in Oman. Between 2000 and 2007, production fell by more than 26%. Oman’s natural gas reserves rank high in terms of quantity, but production has slowly been declining.

There are several real estate developers in Oman, whose target audience is almost always the expatriate community that moves here for better opportunities in their respective careers. Rentals in Oman are the primary type of residential developments among the expatriate community, as they are not allowed to own land or property. Housing types available for rent range from 1-bedroom apartments to full-blown 4-bedroom villas. Studio apartments are rarely available in Oman, due to the majority of expatriates being young couples. However, the single men who travel to Oman for mostly manual labor end up living in “labor camps” – a situation similar to army barracks. The average rental prices for unfurnished residences in Oman can be seen in Fig. 1. Furnished accomodations in Oman cost approximately 25% more than the mentioned figures. Serviced apartments – which offer cleaning, laundry, and linen changing – are also available, but cost 30-50% more than the mentioned rates (Just Landed).

One of the topics that has been of personal interest is affordable housing, and being a monarchy, Oman does not tend to disclose information on poverty and affordable housing and the number of residents earning below the area median income. However, in the last five years, housing affordability has become a highly debated topic here, given that the average monthly income per family is approximately $3,000. While this may seem unnerving, it gets even worse once one realizes the average household size is 7.5 people. The Omani government has been addressing unemployment efforts, especially amongst Omani nationals by providing significant increases in minimum salaries.

Despite these efforts, salaries for Omani nationals are generally limited, resulting in a large wage gap. Local residents in Oman prefer to own land, as homeownership is above 80%, with a strong desire to reside in detached villas rather than apartments or townhouses – a situation that has resulted in a fair amount of urban sprawl in the country. A government-owned organization, “Oman Housing Bank” was created in the 1970s to help with housing affordability, by providing home loans to low-income Omani citizens, with subsidized loans averaging around $78,000. However, this does not help individuals with below median income levels, creating an opportunity for the private sector to capitalize on an untapped segment of the market. Sadly, with not many incentives for private developers, it does not seem viable for the private sector to participate in the national affordable housing building program (Morgan). There are currently solutions being discussed regarding housing affordability, most notably the in-depth look into public-private partnerships and focusing on sustainable design and planning methods. One prime example of this is the Madinat Irfan Urban Development, a large scale mixed-use development consisting of residential, commercial, and public spaces that the architects and planners claim “will embrace Omani culture and heritage by learning from the past to inform a future built environment” (Fig.2) (Allies and Morrison). While this project does address issues of sustainability and walkability within an arid climate, it is highly unlikely that any of the housing is affordable to low-income locals of Oman.

More recently, at the Oman Real Estate Conference last year, Rashid Al Masalti, CEO of National Mass Housing asserted that affordable housing complexes are required to combat the high costs of constructing individual housing units. He also implored private companies to take action towards developing well-planned housing complexes that could offer security and facilities, which could appreciably offer the city more energy savings (Hasan). Following this conference, the Omani government released a plan to develop 1,000 apartments for affordable housing specifically for young locals awaiting their allocation of land from the Ministry of Housing, in an attempt to provide housing for low and middle-income groups (seen in Fig.3) . This is being done through a series of proposals drafted in collaboration with various property developers in Oman and foreign consultants (James).

However, as of this year, the real estate market in the Sultanate of Oman has been slowly recovering. After dropping almost 25% over the past three years, 2018’s first quarter showed a growth of 6.5% in the real estate sector, minute compared to the manufacturing sector at 17%, but a sign of progress nonetheless. According to Cluttons’ “Muscat Property Market Outlook for Spring 2018”, “rents have also entered a period of relative calm, suggesting that the market could be nearing the bottom of the cycle and was primed for a return to growth in 2019”. Another interesting development was the introduction of regulations for Real Estate Investment Trusts (REITs), yet another attempt by the government to tap into rising incomes and encourage fresh investment during improving economic conditions in Oman. Cluttons state that these REITs can increase liquidity in the market, prompting further development in the country from external sources. While this can be seen as a silver lining, it is an unfortunate situation that no one is entirely certain of impact of foreign investments into the real estate sector in Oman, due to new visa regulations that extend a temporary ban on foreign work permits in a variety of sectors (Oxford).

As a huge proponent for affordable housing, travelling back to Oman after architecture school changed my opinion a lot about the country I come from. Given that any unqualified opinion about the country never sees the light of day, I was always concerned about the government’s efforts towards providing aid to low-income residents, especially for housing. It comes as personal pride to see the various efforts that the Omani government has been pursuing to address the issue of housing low-income residents in the country in the past decade.

Screenshot 2018-10-02 at 10.42.55 AM

Fig. 1: Average rental prices for unfurnished residences in Oman. (JustLanded)

*1 OMR = 2.60 USD

Screenshot 2018-10-02 at 10.43.09 AM

Fig. 2: A rendering of the proposed Madinat Irfan Urban Development,

designed and planned by British firm Allies and Morrison (Allies and Morrison).

 

Screenshot 2018-10-02 at 10.43.23 AM

Fig. 3: A rendering of the proposed affordable housing development

provided by the Omani government (Oman Observer).

 

Works Cited

 

Bin Said, Sultan Qaboos. Sultani Decree No. 101/96: Promulgating the Basic Statute of the State. Muscat Governorate, 1996.

Business Group, Oxford. “The Report: Oman 2018: Real Estate.” Oxford Business Group, 2018, www.oxfordbusinessgroup.com/node/932880/reader.

Hasan, Syed Haitham. “Call for Affordable Housing in Oman.” Times of Oman, Times of Oman, 16 May 2017, www.timesofoman.com/article/109206.

James, A E. “1,000 Affordable Homes for Omanis Planned.” Times of Oman, Times of Oman, 29 Nov. 2017, www.timesofoman.com/article/123107.

“Madinat Al Irfan.” Allies and Morrison, www.alliesandmorrison.com/project/madinat-al-irfan/.

Morgan, Steve. “Affordable Housing in Oman – a Growing Issue.” World Property Journal, WORLD PROPERTY JOURNAL, INC., 21 Jan. 2014, www.worldpropertyjournal.com/middle-east-africa-residential-news/affordable-housing-in-oman-real-estate-markets-in-oman-facts-about-omani-households-report-cluttons-oman-housing-bank-7909.php.

“Rental Costs.” Just Landed, 13 Mar. 2016, www.justlanded.com/english/Oman/Oman-Guide/Housing-Rentals/Rental-Costs.

“The World Factbook: OMAN.” Central Intelligence Agency, Central Intelligence Agency, 26 Sept. 2018, www.cia.gov/library/publications/the-world-factbook/geos/mu.html.

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