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Oman construction is back on track

19 December 2023

MEED's January 2024 special report on Oman includes:

> COMMENT: Muscat needs to stimulate growth
> GOVERNMENT & ECONOMY: Muscat performs tricky budget balancing act
> BANKS: Omani banks look to projects for growth
> OIL & GAS: Oman diversifies hydrocarbons value chain
> POWER & WATER: Oman expands grid connectivity
> HYDROGEN: Oman seeks early hydrogen success 
> CONSTRUCTION: Oman construction is back on track

 

In November, Oman restarted its plans to build the long-stalled Blue City project. The revival of the scheme, which was first launched in 2005, is the latest sign of the improving market conditions in the sultanate.

The country has shown resilience, with an increase of 17.4 per cent in real estate trading in the first two months of 2023 compared to the same period in 2022.

Factors such as the easing of global travel restrictions and the economic rebound following the Covid-19 pandemic have stimulated demand for residential and commercial properties.

The improving market conditions have prompted the government to push forward with other schemes as well.

In November, Oman’s Housing & Urban Planning Ministry issued tenders for Sultan Haitham City, a 14.8 square-kilometre mixed-use smart city project located in Muscat. The ministry issued a tender inviting companies to bid for contracts covering the construction consulting services and the enabling works packages.

In January 2023, the ministry also signed agreements to develop the $415m Surouh integrated mixed-use projects at Al-Amerat in Muscat and Halban in South Al-Batinah Governorate. Bids were received for project management consultancy services in October.

Elsewhere, the sultanate's cultural complex project was revived after almost a decade when Oman’s Culture, Sports & Youth Ministry awarded an estimated $384m design-and-build contract to a joint venture of the local Saif Salim Issa al-Harrasi and Turkiye’s Sembol Construction.

Oman’s Finance Ministry is also preparing to develop schools using a public-private partnership (PPP) model. Bid clarification is under way for the contract to develop 42 schools, for which the ministry received three bids earlier in 2023.

Planned pipeline

The pipeline of planned and unawarded projects in Oman’s construction sector is valued at more than $33bn, making it the second-largest sector in Oman. Of this total, $25bn-worth of the projects are for mixed-use schemes, $3.8bn are in the hospitality sector and $2bn are for residential developments.

The pipeline consists of $4.9bn-worth of projects in the bidding stage, $20bn in the design or front-end engineering and design (feed) phase, and just over $8bn under study.

The sultanate’s 10th five-year plan gives priority to construction development by ensuring optimal resource use and investment opportunities throughout the various governorates.

Transport schemes

In an effort to diversify its economy and grow the tourism sector, Oman has been investing heavily in upgrading its transportation infrastructure. Several projects to facilitate the movement of people and goods around the country are under way.

The Oman-Etihad Railway Company has qualified firms to bid for the three civil works packages of its rail project linking Oman and the UAE.

Plans are also in the study phase for a railway link between Oman and Saudi Arabia. If constructed, the line will stretch from the southeastern coast of Oman, through the city of Ibri and then on to Riyadh.

Oman also tendered a pre-feasibility consultancy services contract for the first phase of its planned Muscat Metro network at the end of January 2023. The move added further weight to the expectation that major new rail projects will progress in the sultanate and the rest of the region in the next decade.

Ports are also being expanded to support the growth of Oman’s industrial base. In October, contractors submitted bids for the Masirah multipurpose port in the wilayah of Masirah in Al-Sharqiyah South Governorate.

Contractors are also preparing bids for the contract to develop the Mahout fishery harbour in Oman's Al-Wusta Governorate.

Other major transport PPP projects planned in Oman include developing a seaport in Musunah, the Sohar Port expansion and the Salalah-Thumrait truck road (STTR).

In August, Oman’s Finance Ministry, together with the Transport, Communications & Information Technology Ministry, shortlisted five prequalified teams to compete for the STTR project. The scheme is the first of its kind to be developed under a PPP model in Oman.

The Transport, Communications & Information Technology Ministry also received proposals from bidders for packages three, four and five of the Adam-Thumrait road dualisation project. The scheme was retendered in 2023 after having been cancelled in 2019.

In 2020, Oman announced its National Aviation Strategy 2030 to attract an investment of $3.6bn in airport cities. The country plans to expand its aviation infrastructure and open the sector to private international investors by granting concessions for managing and operating local airports and aviation-related services.

In March, Oman’s Civil Aviation Authority invited international consultants to submit bids for the design and supervision of the proposed development of Musandam airport.

The pipeline of planned and unawarded projects in the transport sector is valued at $13.4bn, making it the third-biggest sector in Oman. Of this total, rail schemes account for $6bn, roads and utility networks comprise $4.5bn, and $1.6bn is for seaport projects. The pipeline consists of about $7.7bn-worth of projects in the bidding stage, $5.1bn under study and $500m in the design or feed phase.

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Yasir Iqbal

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