The removal of fuel subsidies and the government’s austerity measures to tighten spending could provide a welcome boost for public private partnerships (PPPs) in Oman’s real estate market, according to international real estate consultancy Cluttons.

The measures set in place by Oman’s government, such as plans to remove utility subsidies, could also lead to a rise in the number of PPPs by enticing additional foreign investment into the sultanate, it stated.

Faisal Durrani, the head of research at Cluttons, said: "For a country as reliant on hydrocarbon income as Oman, the continuing slide in crude prices is driving the need for additional income streams."

Cluttons believes this move could be beneficial to international investors that want to engage in projects such as the ambitious Port Sultan Qaboos Waterfront.

"We have already seen the successful implementation of fuel subsidies in the UAE, where energy subsidies formed a sizeable proportion of GDP (gross domestic product). Bahrain has also announced similar plans and so it was only a matter of time before other Gulf states including Oman followed suit by dropping fuel and energy subsidies as they try to rebalance their economies in this era of cheap oil," stated Durrani.

Over the past six months, the price of diesel in the UAE has fallen by 30 per cent to 40 per cent, which has a clear upside for the industrial sector, with lower manufacturing and transport costs likely to be passed on to consumers gradually, he noted.

Philip Paul, the head of Cluttons Oman, said the redevelopment of Port Sultan Qaboos (PSQ) was an ideal example of a project that would benefit from international best practices and ‘place-making’ expertise to create a thriving waterfront destination in heart of Muscat that will attract both visitors and residents.

"Urban regeneration is something that is only just starting to appear in cities across the Gulf and will provide tremendous opportunities to create more value from established and desirable parts of central business districts, which often benefit from well-established communities, transport infrastructure and pedestrian footfall; something that developers and investors will find hugely attractive, particularly in the case of PSQ," he stated.
 
According to Paul, there have been limited PPPs in the sultanate’s real estate sector as the size of the market is still fairly small compared to some neighbouring countries.

"International interest in Oman’s real estate development has mainly come from a handful of Gulf developers, however, large-scale projects such as Port Sultan Qaboos Waterfront could open the market for foreign investors to gain a foothold in a highly attractive market that has a good track record," he stated.

Cluttons said the property market in Oman as a whole has been supported by the relative stability in job creation levels in the sultanate, as it continues to boost oil production to inject confidence into the economy.

Continued infrastructure spending has also boosted business confidence and has contributed to stability in the country's residential and commercial markets, it stated.

"PPPs offer a good alternative solution to the government to continue driving major infrastructure projects and boost job opportunities that will support economic growth, particularly when credit availability is low," added Paul.-TradeArabia News Service