Muscat’s Property Market Holds Steady Amid Economic Growth: What Investors and Business Owners Need to Know
MUSCAT: Oman’s real estate sector demonstrated resilience and selective growth in the second quarter of 2025, supported by strong economic fundamentals and steady demand in premium property segments. This comes despite a significant decline in foreign direct investment (FDI) in the real estate market.
According to the “Oman Property Market in Minutes – Q2 2025” report by Savills, the Sultanate’s GDP reached RO 10.5 billion by the end of the first quarter, reflecting a 4.7% year-on-year increase. This growth was driven primarily by a robust oil and gas sector and an 8% annual rise in the construction sector, which contributed RO 666 million. Inflation remained moderate at 0.82% as of June 2025.
However, the positive economic indicators did not translate into a corresponding increase in real estate foreign direct investment, which declined by 36.8% year-on-year to RO 653 million in Q1. Data from the Ministry of Housing and Urban Planning revealed that the total value of property transactions stood at RO 1.36 billion by mid-2025, marking a 3.5% decrease compared to the same period last year. While the number of property contracts fell by 2.3%, mortgage approvals rose by 6.2%, indicating increased reliance on home financing, particularly within the mid-market segment.
In the residential rental market, Al Mouj continued to dominate the 2-bedroom apartment category, with average rents at RO 709 per month. Rental prices in Qurum and Al Khuwair declined to RO 393 (-13%) and RO 475 (-7%) respectively, while Muscat Hills held steady at RO 350, demonstrating consistent demand in that segment.
For larger properties, Al Mouj also led the 4-bedroom villa market with rents climbing to RO 1,400 per month. Muscat Hills experienced a notable 15% quarterly rent increase, reaching RO 1,500, highlighting its growing appeal. Madinat Sultan Qaboos remained stable at RO 1,000 monthly rent.
In the office sector, rental trends in Muscat’s key business districts were mixed. Rents in the Central Business District (CBD) and Qurum stayed steady at RO 2.0 and RO 3.5 per square meter, respectively. Conversely, Al Khuwair and Ghubrah saw declines to RO 4.5, reflecting intensified market competition. Shatti Al Qurum was an exception with a slight rent increase to RO 6.3 per square meter, reinforcing its status as a premium office location. Al Athaiba experienced a minor rent dip to RO 5.5.
Despite some challenges, Oman’s real estate market overall shows signs of stabilization, buoyed by economic growth and focused rental demand in high-end segments.
Special Analysis by Omanet | Navigate Oman’s Market
Oman’s real estate market, while facing a significant drop in foreign direct investment, demonstrates resilience driven by strong economic fundamentals and selective growth in premium segments. Businesses and investors should focus on high-end residential and premium office spaces, leveraging stable demand and rising rents, while cautiously navigating the mid-market segment’s increased reliance on mortgages and softer transaction volumes. This presents a strategic opportunity to capitalize on luxury and well-located assets amid an evolving market landscape.
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