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Oman's Wave sees recovery in real estate sales

by Shane McGinley on Jan 24, 2012

A rendering of The Wave development.
A rendering of The Wave development.

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The Wave, a luxury housing project in Oman’s capital, is gradually seeing a rise in real estate sales after the Gulf-wide property crash and subsequent Arab Spring saw buyers flee the market.

The $3.5bn state-backed project completed 200 unit sales in the second half of 2011, following a dry six-month period aggravated by social unrest in the Gulf sultanate, its CEO said.

“The Arab Spring and the issues that affected the region, particularly Oman in the first half of the year, did impact on the project and sales in particular,” said Michael Lenarduzzi.

“It was a year of two halves. We sold 200 in the second half but very few in the first half. We would have been looking around 400 [sales], but in reality, all our sales came in the second half.”

Demand for properties in Oman waned after the global financial crisis battered neighbouring markets in Dubai and around the Gulf. Tighter lending also reduced sales for Oman property developments, which were mainly geared toward foreign investors and retirees.

The Muscat development, which includes 4,000 real estate units, hotels, and a golf course designed by Greg Norman, had 3,000 properties left to sell at the start of 2011.

The development was the first in the sultanate to allow 100 percent foreign ownership of freehold property.

A gradual recovery in investor confidence was then further hit by the eruption of anti-government protests in Oman, as citizens called for free elections and more housing and jobs.

“When you get big ticket items like property [buyers] sit back and wait to see what is going to happen,” said Lenarduzzi. “That really went through until about June and then confidence started to build again.”

Oman's government in April announced a OR1bn ($2.6bn) plan to create jobs and raise pay; part of a strategy of increasing state spending to OR9.1bn, after weeks of protests.

“Oman seems to have got the balance right in terms of getting people back in line and restoring confidence,” said Lenarduzzi. “By the second half things began to slowly improve and by the end of the year confidence was back to normal levels again.”

The decline in real estate sales pushed back the rollout of the Wave’s four hotels, to include three five-star and one boutique property. The first Kempinksi-branded hotel was due to begin construction in April 2011, but has since seen building work delayed to the first quarter of 2012.

A second hotel, operated by the Fairmont, will follow, Lenarduzzi said.

“It was our intention to get one of the hotels away by the end of 2011 or beginning of 2012 and we are very close to finalising the Kempinski hotel at the moment. Unfortunately I wasn’t able to close that by the end of last year,” he said.

The Wave said last year it was in talks with golfing body the PGA to stage a tour event at its 18-hole Greg Norman course, which was completed in 2011.

“[The course] has been well received… We would look to hold smaller annual events, starting in late 2012, and build up to hold a full PGA event in 2014 to coincide with the opening of the Kempinski,” Lenarduzzi said.