Interview: Simon Karam
How can developers tackle challenges like oversupply and low demand in the real estate market?
SIMON KARAM: We need to review the ongoing construction projects and redefine priorities before starting new ones. The current developments are aimed at expats, so there are two measures that could be taken to meet supply: first, to reverse the trend of expats leaving; and second, to change the laws that obstruct expats from acquiring property, such as those that restrict their families from joining. These measures have to be considered without undermining Omanisation efforts.
Another possibility is to change the function of some buildings. At the moment expat labourers mostly live in camps or in residential areas with their families instead of in properly built structures in designated areas. One could make a deal with the owners of vacant buildings to repurpose them into accommodations for the workforce, including full-service provision and shopping facilities. This would require new regulations to temporarily change or redesign the function of such buildings.
In which areas have the new tenders of the Public Establishment for Industrial Estates (Madyn) created opportunities for development?
KARAM: These projects are not going to make a substantial difference in the sector in the near future, as they are mainly long-term projects. For example, the Samail Industrial Estate was announced in 2010, and substantial development has only recently begun.
Opportunities in Oman are found in oil and gas. Expenditure on hydrocarbons is high, both in maintaining oil production levels and developing gas fields. On its own, BP invested $16bn in one gas field, while Total and Eni plan to develop oil fields. Petrochemicals is another segment where there is a lot of activity. There are some major projects in the pipeline, such as the Duqm refinery, where an estimated 30,000 people will be working, as well as the Liwa Plastic Industrial Complex, which is scheduled for completion in 2020.
Other areas of activity with tangible economic benefits are electricity generation and water treatment. Electricity is changing, as we move from traditional power production into renewable technologies. In 2019 we commissioned the country’s first wind project. In tourism, construction of new hotels will continue, although the number of major projects is declining.
What do developers stand to gain from rising annual expenditures on education and health?
KARAM: The budget for education and health constitutes a major part of government expenditure. However, the share allocated to the construction of new schools and health care centres remains modest, with the exception of one or two major hospital projects. We will not see a big construction boom, which is good in a way because it will allow the market to stabilise. When the price of oil was at its highest, there was an unsustainable amount of construction companies. The market still needs a few years to consolidate and create more sustainable circumstances.
To what extent can the construction sector work with the education system to train specialised engineers and make Oman more globally competitive?
KARAM: A national effort is under way to review the whole labour market situation and it includes the participation of all government ministries, not only the Ministry of Manpower. The National Centre for Employment will gather vacancies, applications, training, counselling and contract-signing together in one place. This is a good move, and the construction sector will provide this centre with valuable data and feedback. The national workforce is capable and talented, as can be seen in sectors that are almost completely staffed by Omanis. Every country is built on education and values, and we should review both in Oman. We are a young country, and we have to go through this period of adaptation to become competitive in the international market.
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