The Corporate Ownership of Land in the Sultanate of Oman

Real estate in the Sultanate of Oman is regulated by the Land Law (Royal Decree 5/80). The law broadly recognises individual and corporate real estate ownership. This article focuses on the corporate ownership of real estate in Oman. The applicable law has sub-categorised corporate land ownership into Omani, non-Omani GCC and foreign ownership.

Corporate ownership of real estate in Oman is subject to a number of restrictions under Omani law. Only limited liability companies which are wholly Omani or GCC-owned, and joint stock companies with at least 30% Omani shareholding, may own real estate in Oman. Furthermore, corporate ownership of property is limited to holding real estate for use as a warehouse, staff accommodation, administrative offices or as a similar special purpose premise for achieving the company’s objectives. An exception to this rule applies to real estate development companies, which can use land to construct and resell residential and commercial units.

While wholly Omani-owned companies may hold freehold rights, there are varying degrees of restrictions on other GCC and foreign entities with respect to property ownership. For instance, a GCC entity purchasing a vacant plot of land is legally obliged to develop it within four years of date of purchase. In addition, wholly GCC-owned companies may only own real estate for investment purposes.

It is important to note the impact of certain amendments to Omani land law and its usage. Royal Decree 76/2010 enables both public and closed joint stock companies with a minimum of 30% Omani shareholding to develop and own land in the Sultanate. In addition, the amendments to this decree allow these companies to engage in real estate development as a business object.

Usufruct rights 
Companies which are not entitled to own land in Oman may nevertheless be eligible to hold a usufruct right in land. This right continues to be the closest thing in Oman to a freehold right. A usufruct right enables its holder to exploit and use the land for the purposes of the applicable project, in the capacity of an owner. Nevertheless, this right is subject to restrictions in the usufruct contract and the obligation to return the land to its owner upon the termination or expiry of the usufruct agreement. A usufruct right on government land can be held for a maximum period of 50 years, which can be extended for similar additional terms. One of the most important features of the usufruct right is the ability for the usufruct land to be mortgaged and, thus, the mortgagee’s right with respect to the land is protected even where the usufruct right is terminated.

However, in the case of entities that are not entitled to own land in Oman, usufruct rights will only be granted over land for the purpose of carrying out a particular project which contributes to Oman’s economy or social development.

Integrated tourist complexes 
The law of Integrated Tourism Complexes (Royal Decree 12/2006, as amended) was issued to market and promote tourism in Oman. This law allows foreign companies to own land or build units for residential and investment purposes in areas designated by the government as “integrated tourism complexes” (“ITCs”). ITCs are typically required to comprise commercial, residential and tourism components. Foreign companies may purchase residential and non-residential units from a developer and register ownership title with the Ministry of Housing. Ministerial Decision 191/2007 set forth broad rules relating to the obligations and rights of developers and third-party purchasers, such as succession, transfer of freehold title and creation of security interest for financing ITC projects.