Oman Review

Tourism thrust

Both private and government projects across various sectors in Oman provide a strong statement of investor confidence in the sultanate’s growing economy, writes DHUSHYANTHI RAVI.

February 2014

OVER the past couple of months, there has been renewed private sector interest in the sultanate which has been making concerted efforts to boost its ample tourism potential.

Investors in the estimated $2.5-billion Omagine project were recently in Oman for high-level talks with the Ministry of Tourism to pave the way for the implementation of the much-delayed project.

In addition, a $1-billion integrated medical city being promoted by the Saudi-based Apex Medical Group is now expected to make headway with the essential groundwork having been completed on the project and key tenders due to be announced soon (see Regional News).

Late last year, Dubai-headquartered business house Majid Al Futtaim signed up to develop and manage a super-regional mall in Oman’s capital Muscat, its second in the sultanate.

Fuelling this optimism in the construction sector is a $50-billion infrastructure package that is set to be the driving force behind Oman’s economic development in the next 15 years with a lion’s share earmarked for the transportation segment.

Some $20 billion is expected to be invested in developing the sultanate’s transport infrastructure in the coming years, with the 2,244-km national rail grid forming the cornerstone of the programme. Construction of this $15.6-billion network, which will link up several major industrial hubs as well as provide a connection to the planned GCC rail system, is expected to begin in the last quarter of this year and be completed in 2018.

Oman is also developing its airport infrastructure with work in progress on a $5.2-billion expansion of the Muscat and Salalah airports, and five new airports planned or under construction. In addition, projects are under way to upgrade the sultanate’s road network at a cost of $5.45 billion, and develop ports and industrial zones at Sohar and Duqm, a new focus area for growth.

Oman’s burgeoning tourism sector will continue to propel growth and investment, with a raft of domestic and international developers showing strong interest in building luxury hotels and resorts in the sultanate. The country is looking to quadruple the number of tourists it receives each year to 12 million by 2020. Spearheading its tourism ambitions is Omran, a leading tourism-related development, hospitality management and investment company that has been mandated by the government to deliver major projects and manage tourism assets and investments such as the new $1.5-billion Convention and Exhibition Centre (OCEC). This showpiece facility is being developed to tap Oman’s significant potential in the regional Mice (meetings, incentives, conferencing, exhibitions) industry (see separate article).

According to Business Monitor International (BMI), Oman’s construction sector will grow at an annual rate of 5.1 per cent between 2014 and 2023 after a slow growth at 1.8 per cent in 2012 and a more moderate growth rate of 2.2 per cent last year. In its Q1 2014, the leading provider of proprietary data, analysis, ratings, rankings and forecasts states the pipeline of projects, particularly in the transport infrastructure sector, will boost industrial growth from 2014 onwards.

Coral Muscat Hotel and Apartments ... flagship property.

Coral Muscat Hotel and Apartments ... flagship property.

In line with its ambitions to spur infrastructural growth, Oman has announced a budget which projects expenditure at RO13.5 billion ($35.1 billion) and revenue at RO11.7 billion, leaving an anticipated deficit of RO1.8 billion ($4.67 billion) for 2014. With the sultanate still heavily reliant on its oil earnings, which represents 83 per cent of total revenue, much of its investment will go into developing oil and gas fields.

Approximately $17 billion worth of projects are planned for the oil and gas sector, while another $13 billion worth of investments will be made in the manufacturing and industrial sector, said Ahmed bin Hassan Al Dheeb, the undersecretary at the Ministry of Commerce and Industry.

Key developments include a refinery and petrochemical project at Duqm Economic Zone and Sohar refinery expansion project.

Given its commitment to spearhead infrastructural growth, diversify its oil-reliant economy by pursuing industrial developments and boost its tourism sector, the government is expected to increasingly look to the private sector to support its ambitions.


Airports & ports

While work continues on the expansion of Muscat and Salalah airports, Oman has invited bids for a new airport project at the coastal city of Duqm, which is being developed as the country’s next major industrial and shipping hub.

The tenders for Package Three of the new development calls for the construction of a passenger terminal, cargo terminal, fire-fighting station, rescue fire-training complex ground support equipment workshop, a 36-m-high air traffic control complex and support facility buildings.

The airport project has been conceived as part of a larger plan to set up a modern seaport in the southeast of Oman. It is among five new airports being developed by Oman, others being ongoing and planned projects for Sohar, Ras Al Hadd, and Adam airports.

Oman recently relaunched tenders for passenger terminal packages linked to the development of greenfield airport projects at Sohar and Ras Al Hadd following a major design review. The structures were scaled down to improve their overall functionality and efficiency without reducing passenger throughput capacities, pegged at 1.5 million passengers per annum. Additionally, the revamped design will allow for horizontal expansions to be undertaken in the future and ample space will be opened up for investment in tourism and aviation-related services. The ministry has adopted a uniform layout for all three domestic airports, covering an area of 5,000 sq m, deemed large enough to house restaurants, retail outlets and amenities for passengers.

Meanwhile, work is under way on the second phase of a modern terminal at the Port of Sohar. The project will increase the terminal’s container handling capacity to 1.5 million twenty-foot equivalent units (TEUs) from the current 800,000 TEUs. The project will entail an estimated investment of nearly RO50 million ($129.5 million). Further expansion scheduled to be concluded by 2018 will add further capacity of 2.5 million TEUs.



Oman is pumping nearly RO2.1 billion ($5.45 billion) into projects to construct new roads and expand the existing road network as part of an overall infrastructure development programme, according to Ahmed bin Salim Al Futaisi, Minister of Transport and Communication.

Al Futaisi said his ministry has approved 67 large road projects covering most areas in the sultanate, including the construction of 2,327 km of new roads in the eastern province of Asharqiya.

Last November, Oman signed 13 contracts for roads and land transport projects worth RO535.55 million ($1.39 billion) including key packages for the Al Batinah Expressway.

The Batinah Expressway deals include one worth RO135.65 million ($352.26 million) for Package Four (50 km), RO132.60 million ($344 million) for Package Five (41 km), and RO124 million ($322 million) for Package Six (45 km).

Oman has been making concerted efforts to link up its interior regions and industrial areas. One such recent project is a 100-km road project, awarded to Strabag Oman under a $119.8-million deal.

The contract is for the second section of the 400-km-long road between the city of Sinaw and the industrial zone in Duqm. Construction was expected to start last month and be completed two years.

Meanwhile, work on a road to link Oman with Saudi Arabia via Al Rab Al Khali region will be completed by the end of this year, according to a news report. The highway project will facilitate travel between the countries by reducing the border crossing points from four to one. It will also reduce the distance between the two countries to 800 km from 2,000 km once the construction on the Haras-to-Al Kharkhiir section is complete.


Commercial & Residential

Perhaps the most awaited project in Oman is the Omagine project, a mixed-use beachfront development near Muscat International Airport, a development agreement for which is expected to be signed soon.

Senior representatives of the US-based founding company were in the capital recently for high-level talks with top officials from Oman’s Ministry of Tourism to iron out all outstanding issues leading to the signing of the development agreement.

The tourism, leisure and residential development promises to transform a wide swath of the waterfront adjoining the airport into one of Muscat’s principal leisure and entertainment hubs.

Covering an area of around 1 million sq m overlooking the Sea of Oman, Omagine is proposed to be an integration of cultural, heritage, educational, entertainment and residential components. The centrepiece is a ‘high culture’ theme park featuring seven pearl-shaped buildings, each approximately 60 ft in diameter, associated exhibition buildings, a boardwalk, an open air amphitheatre and stage, open space

Around 2,000 residential units will also be developed as part of the project.

In line with the country’s tourism ambitions, there is a significant pipeline of hotel developments, with 19 hotels being built that are all expected to be opened by the end of this year, according to information on the Hotelier Middle East website. These hotels will add over 2,000 rooms to Oman’s national supply.

BMI forecasts that around 70 new hotels and other hospitality units will open in Oman by 2017.

The number of hotel rooms in the Muscat governorate is expected to double over the next five years from a current stock of about 3,750 to about 7,750. New supply in the Omani market will be properties managed by Rotana Hotel Management Corporation, Kempinski Hotels, Fairmont Hotels and Resorts, Ritz-Carlton, Rezidor, Millennium Hotels and Resorts, Alila Hotels and Resorts, InterContinental Hotels Group, Anantara Hotels, Resorts and Spas, LVMH Hotel Management, Starwood Hotels and Resorts Worldwide, Angsana Hotels and Resorts, Shaza Hotels, and Marriott.

Omran is developing the new five-star Alila Jabal Akhdar Resort, perched on top of the Al Jabal Al Akhdar Mountain in Al Dakhiliya Governorate. The resort is due for a soft-opening shortly (see separate report).

In joint venture with Musstir, Omran is also developing the Al Baleed Anantara Resort and Spa, which is being built beside the Al Baleed Unesco World Heritage archaeological site near Salalah.

The five-star hotel is set for completion in the first quarter of next year, according to a source close to the project. The resort will include 30 hotel rooms located in a central hotel building and 106 pool villas.

Another Anantara resort being built is the Jabal Akhdar Anantara Hotel Resort and Spa. Dubai-based construction firm Al Jaber Engineering and Contracting (ALEC) has been awarded a contract to build the new 115-key luxury property in Jabal Al Akhdhar at a cost of around $53 million.

Meanwhile, The Wave-Muscat, a world-class mixed-use community comprising luxury residential properties, retail and dining facilities and Oman’s only signature designed PGA standard 18-hole links golf course, will see soon include a Kempinski hotel.

The Oman Hospitality Company recently awarded a RO57.37 million ($149 million) contract to Carillion Alawi to build the Kempinski Wave Hotel. Carillion began work on the project in October on a 40,000-sq-m plot, under a 24-month contract. The contract involves the construction of a beachfront resort including a 309-room five-star hotel and 77 hotel apartments, to be operated by Kempinski Hotels.

Another major project in this sector is the Saraya Bandar Jissah, an integrated tourism complex in Muscat, construction of which is expected to begin soon. The development will include exclusive residential units, two five-star beachfront hotels and a recreational area. Saraya Bandar Jissah is spread over 2.2 million sq m on the outskirts of Muscat on a secluded beach surrounded by the Hajjar Mountains.

Saraya Bandar Jissah will soon float the construction tender for a boutique hotel, a five-star 106-key hotel resembling an old Omani village.

Among other developments, work is due for completion in the second quarter of this year on the Coral Muscat Hotel and Apartments in Qurum. It is one of the five properties scheduled to open this year under the Hospitality Management Holdings (HMH) banner and will be a flagship hotel for Coral Hotels and Resorts in Muscat.

Moves are also under way to boost Oman’s retail facilities. The sultanate biggest mall will be built in Muscat at the cost of RO180 million ($467.5 million) by Majid Al Futtaim Properties. Construction of the mall, which will house 350 stores, will start this year and will be built on 157,000 sq m of land. The mall is expected to be completed in the fourth quarter of 2017.

In addition, Muscat Grand Mall will double its retail outlet capacity, parking space and entertainment options. As part of the Tilal Complex, Phase Two of the project will house 100 new retail outlets over 30,000 sq m of additional mall space. The new development, expected to be completed before the last quarter of 2015, will take the total number of stores to 250. The expansion of Muscat Grand Mall is expected to cost more than RO50 million ($130 million).

Meanwhile, United Real Estate Company recently inaugurated its latest commercial and hospitality development – the Salalah Gardens Mall and Salalah Gardens Residences, in Salalah.

Salalah Gardens Mall is the first mall in Salalah, featuring a wide variety of shopping, dining and entertainment activities. Connected directly to the mall, Salalah Gardens Residences is the hospitality component of the development comprising of 168 keys operated by Safir International Hotel Management Company, a subsidiary of Kuwait Hotels Company.

The mall is Salalah’s largest mixed-use development with a built-up area of 86,074 sq m which includes 30,000 sq m of retail leasable space, a traditional old suq, Salalah’s first three-screen multiplex cinema and parking facilities for more than 1,300 vehicles.

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