Summary

The Oman construction market is expected to register a CAGR of more than 5% during the forecast period, 2021-2026. The construction industry in Oman has been severely impacted by the COVID-19 outbreak. The pandemic impacted the growth across key sectors over the short to medium term, and recovery is expected to be slow.

The factors driving the growth of the market are the Omani Sultanate’s strong economic diversification plans, which include developing and diversifying the economy and releasing its potential for growth, with the ultimate goal of promoting development and competitiveness through increased government spending on key non-oil sectors and stimulating private investments.

Key Market Trends

Sultanate's Economic Diversification Plan (Vision 2020) has been a Key Growth Factor of the Construction Sector

As an economy that relies heavily on revenue from oil, a shift is required to diversify sources of income by promoting investments in targeted sectors. The government has focused on pursuing this objective by boosting the contribution of the five target sectors in the Ninth Five Year Plan, including logistics, manufacturing, tourism, fisheries, and mining, as well as moving forward with key strategic projects.

The Sultanate of Oman is executing a successful model of economic diversification, notably, the country’s trade liberalization in goods and services. Oman pursued an active plan of development that focuses on diversification, manufacturing, and privatization to diminish the contribution of the oil sector to the GDP to 9%. The tourism and hydrocarbon industries have become the main components of the government’s economic diversification strategy.

In the manufacturing sector, Tanfeedh (Economic Diversification Plan) was slated for new investments by 2020, although this was brought to a standstill by the pandemic later. The key sub-sectors include the petrochemicals, metals, materials, and the food and energy sectors. Oman’s tourism sector is mostly untapped. The Travel and Tourism Competitiveness Index of Oman in 2019 was 58 globally. Although the pandemic heavily impacted the tourism sector in 2020, an increase in infrastructure spending plans may help the sector recover over 2021‑2022.

Within logistics, the Omani government is positioning Duqm as a major industrial and business zone in the region. One of the objectives of the Special Economic Zone Authority in Duqm is to develop the central arid region of the country and create ample space for international and local investors to build world-class projects. This will help achieve promising growth in the Omani economy, and at the same time, strengthen the country's position at the international level.

Tourism is Expected to Drive the Commercial Construction Sector in Oman

ln alignment with Oman Vision 2040 and the Tenth Five-Year Plan, tourism has been identified in the plan as a key sector to achieve economic diversification in the Sultanate, promote growth, increase the GDP's non-oil revenues, and attract direct foreign investments.

The Ministry of Tourism (MoT) unveiled its 2040 strategy, which will see investments of around OMR 20 billion through 2040 and the creation of more than half a million jobs. A great majority of that investment (86-89%) will be through the private sector.

The ministry expects at least 11.7 million international and domestic tourists in 2040, a big jump from the 1.4 million in 2013. The ministry wants to provide around 80,000 rooms for accommodation: 33,373 hotel rooms, 29,287 vacation homerooms, and 17,262 integrated tourism complex (ITC) rooms.

Muscat’s share of accommodation is expected to decrease from 53% now to 30.8% in 2040 as more hotel rooms come up in other parts of the country. Dhofar’s share is likely to rise from 12.6% to 23.8%.

The MoT has identified five types of natural sites for tourism, wildlife, mountains, wadis, deserts, and coasts. It has also identified five elements of culture and heritage, cities and villages, world heritage sites, cultural heritage, symbols, and norms and traditions. 14 clusters of tourist infrastructure will be built around the country as per regional attributes. These include coastal areas, bronze and iron age ruins, castles, mountains, villages and wadis, the Bedouin region, and Rub al Khali.

Some of the notable projects in the pipeline include “Yeti Sustainable Tourism City” project, a 1.5 million square meters waterfront tourism complex, the 5-star ‘Alila Hinu’ Bay Hotel in Mirbat, Dohfar, with its 112 room, integrated leisure facilities, and free-hold villas.

Competitive Landscape

The Oman construction market is highly competitive with the presence of major international players. The market may present opportunities for growth during the forecast period, which is expected to further drive market competition. With a few players holding a significant share, the Oman construction market has an observable level of consolidation.

Additional Benefits:

The market estimate (ME) sheet in Excel format
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