In recent years, we have seen a significant decline in the number of construction contracts awarded in the sultanate. Long gone are the days it would appear of the major projects such as Muscat and Salalah Airport and the Muscat Expressway. Of course, this has almost exclusively been due to the budget deficit the country has had to run and the subsequent downgrading of its sovereign credit rating to non-investable status. When we combine this with the effects of COVID-19 to the country’s position, we saw a major decline in industry activity from 2017 onwards.

Looking at the market though, there are some positive signs of life. This certainly won’t lead to the levels seen in the somewhat halcyon 2009-2017 period, but there are reasons to believe that the bottom of the market has been reached.

We are now seeing the private sector becoming more active. In part this is due to the government providing a certain level of infrastructure required for further onward investment in development. Furthermore, the government led companies that have historically relied on joint ventures to develop schemes – most notably OMRAN – are now engaged with major partners who have spent a major period of time analysing the opportunity and assessing the infrastructure investments impact on the feasibility of schemes. These include continued or new engagements with Majid Al Futtaim, Diamond Developers and Qatari Diar.

With the private sector starting to reengage, we also see the potential for investment from wider GCC governments or quasi-government companies and funds for development. Historical trends indicate that higher oil prices and reinvigorated government funds in Saudi Arabia, UAE, Qatar and Kuwait lead to outward investment and stimulus packages to support the GCC countries, the wider Arab world and global countries considered candidates for funding. We’ve seen examples of this over the years, including Bahrain Airport development, which was in part funded by Abu Dhabi Fund for Development.

It is reasonable to expect a certain level of external investment, certainly in social infrastructure over the coming two to three years, in support of the sultanate’s push for continued diversification in its economy, and also supporting its status as one of the neutral negotiators in the region and thus a political makeweight. Combining this with the strong opportunity to generate tourism and thus return on investment, private sector and external government sectors see opportunity – although on a case by case basis.

It is with that in mind, we see the contract awards in Oman growing steadily to around 55% of the 2015 number by 2024 to c.$8.8bn (vs. c.$16.1bn in 2015). This is a significant rebound from the COVID-19 2020 of only c.$1.82bn. With the significant contraction of recent contribution of the industry to GDP and loss of workforce, it would seem that Oman may just be stirring. For many, we hope it wakes up.