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By Matthew Wright, Associate Director of Development, Cluttons Oman
The growth prospects and job opportunities in this positive sector are considerable as Oman seeks to take advantage of its strategic location outside the Straits of Hormuz and close proximity to major shipping routes.
Wide range of initiatives drive logistics development in Oman
The proposed GCC railway network will open up new, efficient and cost effective transport routes into the GCC market, particularly the region's dominant market of Saudi Arabia. The development of the railway network is perceived as a "game changer" by the logistics industry.
A proposed GCC customs union, which is currently scheduled to happen in 2015, will be vital to allow the free movement of goods within the GCC, and the continuing development of Oman's ports, roads and airports is constantly increasing Oman's logistics efficiency and capabilities.
And, the recent decision to move freight traffic for northern Oman via water from Port Sultan Qaboos to Port of Sohar is a positive step which provides greater structure and certainty for the development of the light industrial and logistics sector in the Sultanate.
Logistics growth leads to real estate investment
The current and projected growth of the sector is and will result in significant real estate requirements as evidenced by the on-going development of international quality warehousing along the highway between Naseem Gardens and Barka. We see particular growth and potential in several industrial/logistics hubs.
Following on from the development of the industrial port at Sohar, the adjoining freezone is now developing rapidly and the PEIE industrial estate has recently announced a further expansion (Phase 7) of 8.5 million square metres. We see a significant and increasing demand for warehousing in Sohar, particularly as freight traffic is pushed up from Port Sultan Qaboos and the freezone develops.
Port of Salalah has developed rapidly to become a major global transhipment hub. With the focus now shifting to further development of the neighbouring freezone, Cluttons sees a significant opportunity for warehousing development.
The development of Duqm as a new industrial port and city is still in its nascent stages but Cluttons sees increasing interest in this location as the development plans become clearer. We would expect large scale logistics facilities demand and development in Duqm over the coming years.
The current development of Muscat International Airport includes increasing the freight handling capacity from 100,000 to 260,000 tonnes per year. Proposed development includes a logistics hub in the Eastern Sector which will require extensive development of warehousing.
Barka has already seen the development of several international warehousing facilities and we expect this area to develop as a logistics hub to serve the Muscat capital area and interior.
Huge potential for warehousing development in Oman
Currently the majority of warehousing/light industrial units in Oman remain owner built and occupied. As a result, there continues to be a very limited supply of light industrial/warehousing units available for rent. Our experience of the Muscat and Batinah markets is that demand for warehousing facilities is good with the result that rental values for warehousing have remained stable while all other GCC countries have seen a drop in rental values since 2008.
We consider that there is an evident gap in the market for modern warehousing and light industrial units to service the needs of the expanding manufacturing and logistics sectors. In addition to speculatively built warehousing units, we also see a significant future requirement for build to suit warehousing facilities where a developer constructs a warehouse to the tenant's specific requirements on the basis of a long term lease.
With current and proposed developments, the future of the logistics sector in the Sultanate is bright, and Cluttons logistics team foresees significant and exciting real estate opportunities resulting from this.
