FOREIGNERS ALLOWED TO OWN PROPERTY IN OMAN

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
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