US embassy cable - 04MUSCAT2096

UNCLAS SECTION 01 OF 02 MUSCAT 002096 
 
SIPDIS 
 
DEPT FOR NEA/RA, NEA/ARPI 
DEPT PLEASE PASS USTR/JBUNTIN 
USDOC FOR 4520/ITA/MAC/AMESA/OME/MTALAAT 
 
E.O. 12958: N/A 
TAGS: EINV, ECON, CVIS, MU, Economic Affairs 
SUBJECT: FOREIGNERS ALLOWED TO OWN PROPERTY IN OMAN 
 
1. Summary: A recent decision by the Omani government 
allows non-Omanis to own real estate in tourist complexes 
licensed by the government. The decision supports 
government efforts to promote investment and attract 
foreign capital.  Several prominent projects are lining 
up residential clients to take advantage of this new 
legislation.  Final implementing regulations are expected 
by the end of the year.  End Summary. 
 
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Land Rush in Muscat? 
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2. The Ministry of Housing, Electricity and Water (MHEW) 
issued a decision in mid-November to allow non-Omanis to 
own real estate "for housing or investment purposes" 
within comprehensive, complete, and government-licensed 
tourist complexes. Such complexes do not yet exist, 
although a number are in the advanced planning stages. 
The MHEW and Ministry of Tourism expect to complete final 
implementing regulations by the end of 2004. 
 
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Broad Benefits Outlined 
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3. The MHEW decision included several provisions to 
regulate foreign ownership as follows: 
 
-- Foreigners, expatriates, and corporate entities will 
be allowed to own real estate in designated tourism- 
related areas, for residential or investment purposes. 
 
-- Ownership of the real estate (if it is a land plot) 
shall return to the government if construction on the 
plot is not completed within four years. In this case, 
the owner is compensated at the purchase price or price 
of an auction, whichever is lower. The MHEW may extend 
the time allowance for a maximum of two more years. 
 
-- The owner will have the right to sell the real estate, 
whether the property is developed (e.g., a residential 
unit), or land ready for development.  The owners will 
pay 10 percent of the sale price to the Ministry of 
Tourism in the former case, and 20 percent in the latter 
case. 
 
-- In case of owner's death, the property shall be passed 
to heirs as per the laws of the country of citizenship of 
the deceased. Otherwise, ownership shall return to the 
Omani government in case of no claim of inheritance 
within five years of death. 
 
-- The owner and his/her immediate family members will be 
granted residency status in the Sultanate under a 
separate visa category that will be introduced.  No time 
restriction will be applied to this residency, according 
to Tourism Ministry officials. 
 
-- The owner also retains the right to dispose of 
property according to local laws in case of a legal 
sentence of deportation. 
 
-- If the property is confiscated for public interest, 
the owner shall have the right to compensation without 
hindering his/her right to own another property. 
 
-- The Ministerial decision included provisions for the 
establishment of a licensing committee for tourist 
complexes, which will be assigned by the Ministry of 
Tourism. Another committee set up by the MHEW will be 
responsible for setting up auctions to deal with the 
above-mentioned cases. 
 
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Comment 
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4. This long-awaited announcement clearly aims at 
promoting foreign investment and high profile tourism. 
Several prominent projects, such as the much-ballyhooed 
"The Wave" tourist complex and a new Golf and Country 
Club resort in Muscat, were relying on this decision in 
order to book advance sales of villas and apartments to 
prospective customers. Moving from tight restrictions on 
real estate investment to broad liberalization on this 
scale will be tricky, and all eyes will be on the 
government as the implementing regulations and by-laws 
are established in the coming weeks. The true investment 
prize - commercial real estate - is still off-limits to 
foreign buyers.  While there is no reason to expect a 
massive land rush anytime soon, the conditions are 
increasingly promising for expatriates seeking to own 
real estate in Oman. 
 
BALTIMORE