Friday, June 27, 2014

Real Estate Investment in Oman by GCC Nationals and Entities

The Law regulating the Ownership of Real Estate by Gulf Cooperation Countries (“GCC”) Nationals in the Member States for the purposes of Residence and Investment was issued by Royal Decree 21 of 2004 (the “GCC Law”).

The GCC Law has been issued in implementation of Article 3 of the Economic Agreement between the Arab Gulf Co-operation Council (“AGCC”) States, which aims to grant a citizen of any AGCC State national treatment in all AGCC States in relation to, amongst other things, the right to own real estate.

This does not purport to affect any existing favourable rights available to AGCC nationals in any member State at the time of promulgation of the GCC Law or such rights granted by any or all member States in the future.

Pursuant to the GCC Law, GCC nationals (whether natural persons or corporate entities from any of the GCC member countries) will, for the purposes of ownership of land, be treated on par with Omani nationals.

Article 1 of the GCC Law provides for the right of GCC nationals, whether natural persons or corporate entities (fully owned by GCC nationals), to lease and own built-up properties and lands for the purposes of residence and investment in any manner stipulated by the laws of Oman. Consequently, companies registered in the GCC will not be permitted to avail the benefits of the GCC Law if they are not 100% owned by GCC nationals.

Land which is yet to be developed may not be disposed of before the completion of four years from the date of registration of title and must be developed within four years of registration in the name of the GGC owner. Failure to do so would enable the State to recover the land and compensate the GCC owner for a sum equivalent to the lesser of (i) the value of the land at the time of registration or (ii) at the time of sale. It should be noted that recovery of land by the State does not prejudice the owner’s right to lodge a complaint with the competent authority which may extend the four-year period if satisfied by the reasons for the delay.

The GCC Law imposes certain restrictions on owners regarding the disposal of vacant land before developing or utilising it, unless the owner obtains the approval of the competent authority to dispose of such land.

The GCC Law does not limit the authority of the State to expropriate real estate for public use against a fair compensation to be paid to the owner in accordance with the relevant laws or rules of such State, nor does it limit the authority of the State to prohibit ownership or use of land in certain areas or locations.