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Oman Focuses on Creating New Opportunities for Real Estate Investment.docx

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Dr. Ehsan Bayat
Dr. Ehsan Bayat

Oman has recently introduced new opportunities for investment in real estate, including tokenization, crowdfunding, and REITs.

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Oman Focuses on Creating New Opportunities for Real Estate Investment While the pandemic created financial complications for countries across the globe, many nations in the Middle East were able to bounce back quite quickly. This includes Oman, which experienced some financial growth in 2021 and took unique steps in 2022 to encourage additional investment in the country. One of these steps was to embrace real estate tokenization as a new way for project developers to raise funds for projects and propel the expansion of the real estate market. The Capital Market Authority (CMA) in Oman consistently seeks out new options for financing and investment, particularly for the real estate market. As the CMA worked to develop a new regulatory framework for virtual assets, real estate tokenization emerged as an easy solution for driving additional investment and opening the market to potential investors. The Promise of Tokenization for Omani Real Estate Developers
Tokenization means that developers can transform pieces of real estate into tokens that are exchanged through blockchain-based networks. Through tokenization, real estate becomes much more liquid. People can buy and sell property through a quick blockchain transaction rather than going through many rounds of paperwork. This faster approach makes people more likely to invest because they know they will not need to spend a long time trying to sell the property if they ever decide to. Furthermore, international investors who may not be able to travel to Oman to complete a deal will now have better access to Omani real estate. Beyond this, tokenization also provides all the protections of the blockchain, which creates an immutable record of all transactions. The blockchain market reduces fraud and boosts investor confidence. Part of the move toward tokenization would be the creation of a virtual asset exchange specifically for Oman. This exchange would be similar to the crypto exchanges that have been created in other regions and would fall under the jurisdiction of the new regulatory framework for digital assets. The digital exchange further adds to liquidity, as it provides a central location for buying and selling digital real estate assets. This kind of exchange could create a vibrant marketplace for Omani real estate and make it easier for investors across the globe to get involved with the market. Furthermore, this market could make it easier for real estate developers to sell their properties because they can list them directly on the exchange. While an exchange does not mean that every real estate token transaction needs to go through it, the system provides some reassurance that there will be a market for the propertyand saves both buyers and sellers time in looking for deals. Other Exciting Fundraising Options for Omani Developers Omani property developers have explored several other options for investment routes. For example, real estate investment trusts (REITs) have recently been introduced to the country. REITs allow investors to get involved with real estate without purchasing an entire property. Instead, they invest in a portfolio. A real estate developer can create a portfolio and divide it into shares. Then, investors get a share of the profits from the portfolio proportionate to the number of shares that they own. REITs are a great way to tear down some of the usual barriers to getting involved with the real estate market, such as the high cost of purchasing a property and the need to hire management
companies for properties that are not local to the investor. REITs are managed for a fee by the portfolio owner. Another option that Oman is exploring is crowdfunding. Ethis, the first Islamic crowdfunding platform, provides exciting new possibilities for developers and investors, not to mention end users of new units. Developers can use crowdfunding to jumpstart new projects, and in return, offer benefits to the investors, such as equity. Like REITs, crowdfunding is a great way for smaller investors to get their foot in the door of the real estate market when they may not necessarily have the money to purchase an entire property. For property developers, this eliminates the need to go through banks, which have much more stringent criteria for loans than they did before the pandemic and may end up charging heavy interest rates or expecting payments sooner than the developer would be able to make them. Looking Forward to the 2023 Omani Real Estate Market Already, Oman has made major strides in turning around its financial situation and diversifying its markets. The new opportunities are important because they reduce reliance on traditional fundraising and open new avenues into the market for people who have previously been excluded from investing. In addition, these new opportunities support developers of all sizes, not just the large, established ones. The future looks very promising for the Omani real estate market. Moving forward, the success of the market will rely on sparking interest in investors and drawing more attention to the opportunities available in Oman.

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Oman Focuses on Creating New Opportunities for Real Estate Investment.docx

  • 1. Oman Focuses on Creating New Opportunities for Real Estate Investment While the pandemic created financial complications for countries across the globe, many nations in the Middle East were able to bounce back quite quickly. This includes Oman, which experienced some financial growth in 2021 and took unique steps in 2022 to encourage additional investment in the country. One of these steps was to embrace real estate tokenization as a new way for project developers to raise funds for projects and propel the expansion of the real estate market. The Capital Market Authority (CMA) in Oman consistently seeks out new options for financing and investment, particularly for the real estate market. As the CMA worked to develop a new regulatory framework for virtual assets, real estate tokenization emerged as an easy solution for driving additional investment and opening the market to potential investors. The Promise of Tokenization for Omani Real Estate Developers
  • 2. Tokenization means that developers can transform pieces of real estate into tokens that are exchanged through blockchain-based networks. Through tokenization, real estate becomes much more liquid. People can buy and sell property through a quick blockchain transaction rather than going through many rounds of paperwork. This faster approach makes people more likely to invest because they know they will not need to spend a long time trying to sell the property if they ever decide to. Furthermore, international investors who may not be able to travel to Oman to complete a deal will now have better access to Omani real estate. Beyond this, tokenization also provides all the protections of the blockchain, which creates an immutable record of all transactions. The blockchain market reduces fraud and boosts investor confidence. Part of the move toward tokenization would be the creation of a virtual asset exchange specifically for Oman. This exchange would be similar to the crypto exchanges that have been created in other regions and would fall under the jurisdiction of the new regulatory framework for digital assets. The digital exchange further adds to liquidity, as it provides a central location for buying and selling digital real estate assets. This kind of exchange could create a vibrant marketplace for Omani real estate and make it easier for investors across the globe to get involved with the market. Furthermore, this market could make it easier for real estate developers to sell their properties because they can list them directly on the exchange. While an exchange does not mean that every real estate token transaction needs to go through it, the system provides some reassurance that there will be a market for the propertyand saves both buyers and sellers time in looking for deals. Other Exciting Fundraising Options for Omani Developers Omani property developers have explored several other options for investment routes. For example, real estate investment trusts (REITs) have recently been introduced to the country. REITs allow investors to get involved with real estate without purchasing an entire property. Instead, they invest in a portfolio. A real estate developer can create a portfolio and divide it into shares. Then, investors get a share of the profits from the portfolio proportionate to the number of shares that they own. REITs are a great way to tear down some of the usual barriers to getting involved with the real estate market, such as the high cost of purchasing a property and the need to hire management
  • 3. companies for properties that are not local to the investor. REITs are managed for a fee by the portfolio owner. Another option that Oman is exploring is crowdfunding. Ethis, the first Islamic crowdfunding platform, provides exciting new possibilities for developers and investors, not to mention end users of new units. Developers can use crowdfunding to jumpstart new projects, and in return, offer benefits to the investors, such as equity. Like REITs, crowdfunding is a great way for smaller investors to get their foot in the door of the real estate market when they may not necessarily have the money to purchase an entire property. For property developers, this eliminates the need to go through banks, which have much more stringent criteria for loans than they did before the pandemic and may end up charging heavy interest rates or expecting payments sooner than the developer would be able to make them. Looking Forward to the 2023 Omani Real Estate Market Already, Oman has made major strides in turning around its financial situation and diversifying its markets. The new opportunities are important because they reduce reliance on traditional fundraising and open new avenues into the market for people who have previously been excluded from investing. In addition, these new opportunities support developers of all sizes, not just the large, established ones. The future looks very promising for the Omani real estate market. Moving forward, the success of the market will rely on sparking interest in investors and drawing more attention to the opportunities available in Oman.