There is a small nation in the Arabian Peninsula that hardly ever makes headlines. It’s very low profile, unlike its neighbours. It’s in the proximity of nations which are either exuberant or in absolute catastrophe. For example, the most rapidly modernising state in the world is arguably Saudi Arabia, and the most devastated nation in the world is perhaps Yemen. There is the exuberance of Dubai and the notoriety of Iran. And amidst all this is the quiet nation of Oman, growing slowly but steadily, and diversifying away from oil into services and manufacturing.
It’s a silent nation that likes to mind its own business. The country, like many others, wasn’t doing too well during the COVID-19 pandemic. The economy has shown a resurgence with consistent growth since 2021. In 2023, the real GDP growth reached approximately 1.4%, and it is projected to rise to 1.6% by 2025. This recovery is no coincidence. The sultanate successfully reduced its debt to around 30% of GDP. The country is secure, with sufficient surplus to manage potential crises, which has attracted investors and organisations that have positively influenced its sovereign credit outlook.
You might be wondering, “But many countries have staged a post-pandemic comeback, so why is Oman special?” Well, it’s special because its growth wasn’t fuelled by oil, which is unusual for a GCC nation. Surprisingly, most of the growth came from sectors like tourism and manufacturing. They didn’t make headlines like those of Saudi Arabia or Dubai, but achieved it all with quiet dignity.
A bit of history
Before the 1960s, Oman was a subsistence society. The quality of life was considered poor by global standards, and the population was dependent on fishing, husbandry, and agriculture. They participated in a trade network connecting East Africa, India, and regional partners, including Iran, Yemen, and Saudi Arabia. A very conventional orthodox society that valued tradition more than progress, it pursued nothing exceptional, until the discovery of black gold and the subsequent oil boom in 1964 at Fahud.
Oil attracts empires like stale fruits to flies. The British were invested in the oil in Oman. But the Ibadi Imamate and its elected rulers, who ruled the hinterlands of Oman, were wary of outsiders and foreign influence. The empire backed the Al Said Sultanate, which ruled the coastal regions of Oman.
Sultan Said bin Taimur defeated the Imamate and unified the country, and oil exports commenced in 1967. He was an isolationist who was against modernising to the point of madness. He famously banned spectacles, sunglasses, radios, bicycles, football, and even umbrellas.
Sultan Said bin Taimur’s rule would swiftly come to an end when his son, Sultan Qaboos bin Said, usurped the throne on July 23, 1970, in a bloodless coup. The British-backed usurpation transformed Oman by integrating it into global capitalism, thus ending its isolationist policy. Public administration, banking, public works, health care, and education were all established soon enough.
Before COVID-19, Oman was growing around 3% per year on average from the 2000s. Growth had nothing to do with any tourism initiative or industrial and agricultural efforts. Oman was at the mercy of global oil and gas prices, as crude exports were its primary source of income. Even in 2020, oil and gas still made up about 60% of merchandise exports and around three-quarters of government revenue.
The collapse of oil prices in 2014-15 jolted the sultanate to a painful realisation that depending on oil alone is not a sustainable economic policy. Oman went from a nation with negligible debt in the 2000s to having public debt which was above 40% of their GDP in 2019. Subsequently, “Vision 2040” was proposed, but the country went into further shock again during the COVID-19 pandemic. In 2020, global oil demand collapsed, causing Oman’s GDP to contract by 3.4%. During the same period, debt soared to 64% of GDP. Fiscal reforms were underway. This included subsidy rationalisation, austerity measures, and even the introduction of Value Added Taxes in 2021.
Growth beyond the oil field
Oman is a mid-tier oil producer with crude reserves of around 4.8 to 5.4 billion barrels. It also has tens of trillions of cubic feet of natural gas reserves used for power generation and exports.
Hydrocarbons continue to play a central role in Oman’s economy, though their dominance has gradually declined. In recent years, oil and gas have accounted for roughly one-third of GDP, down from historical levels of 40% to 50%, while still providing the majority of government revenue and export earnings.
The National Centre for Statistics and Information claims that Oman’s GDP grew by 4.7% in the first quarter of 2025 to a total value of OMR 10.53 billion. This might seem trivial until you take into consideration the fact that not even a fraction of this growth was due to crude oil production. In fact, crude oil activities had slowed down by 7.5%.
The non-oil productivity was at a whopping OMR 7.13 billion, a figure that reassures that “Vision 2040” is not just empty words on paper. There is more good news, because the service sector grew by 4.2%. This includes finance and tourism as well. Industries contributed around 2.8%.
However, the real deals were the fisheries and agricultural sectors, growing at double digits to a staggering 11.1%. This makes Oman an independent and resilient nation with very little need for imports of basic goods like food.
One of the biggest wins for the government recently has been the return to “investment grade” status. In late 2024, S&P Global Ratings upgraded Oman’s credit rating to BB+, a move that essentially told the global financial community that the Sultanate is a safe and reliable place to put money. This was not an accident.
The Ministry of Finance has been incredibly disciplined, using windfall revenues from previous years to pay down public debt and build up a safety net. This fiscal prudence cleared the way for a wave of Foreign Direct Investment (FDI). Over the past five years, FDI in Oman has grown by 17.6%, reaching a cumulative value of OMR 26.7 billion.
They say the Arabs own London. In Oman, the United Kingdom is the major player and accounts for half the FDI that flows into the country. The United States, UAE, and India are trailing behind. The sultanate loves the money flow and has signed aggressive legislation to improve momentum.
Not so long ago, foreigners couldn’t keep ownership of permanent immovable assets in most of the GCC. In Oman today, after the legislation of the “Foreign Capital Investment Law,” anyone can have complete ownership without minimal capital requirements. Corporations are flocking to free zones like Sohar and Duqm, or to the capital city of Muscat, to start their offices.
Oman is wary of inequality and K-shaped growth. They believe in a concept called ICV, or “In-Country Value,” which is part of the Omanization programme. They encourage companies to employ locals, use local resources and suppliers, so that no community or class of Omani people are left behind during the growth.
Also, Oman famously introduced the “Social Protection Fund” to provide free universal child benefits and pensions for the elderly (the first of its kind in the Gulf), thus reaffirming their commitment to welfare, long-term planning, and sustainability.
Total credit is growing by 8.4% and will be OMR 34.1 billion. The banks are healthy, and people are borrowing and investing in their businesses, and the indicators suggest that the economy is humming. They still use oil but are welcoming a new age where prosperity does not depend on global energy markets.
Dubai is pompous, Oman is classy
There is no Burj Khalifa or the Line in Oman. It isn’t building the tallest tower, the longest city, or the most expensive amusement park. It’s not a place for crypto billionaires and oligarchs looking for wild parties. Not a nation committed to hedonism, unlike Dubai and, to a certain extent, Saudi Arabia or Qatar. It is not competing with other Arab nations.
Instead, it is leaning into what it does. They are celebrating “Quiet Luxury.” Oman doesn’t believe in glitz. It has chosen tranquillity, nature, and authenticity. The keyword here is “hushpitality,” a blend of top-tier service and serene landscapes to truly disconnect from the noise of European and other Middle Eastern cities.
High-net-worth individuals are tired of pompousness and decadent displays of wealth. What they seek is peace and meaning. Oman supplies both abundantly with its dramatic mountains, vast deserts, and untouched coastlines.
Even the official position of their “Ministry of Heritage and Tourism” is clear. They are not chasing mass tourism. They prefer quality to quantity and want the type of traveller who spends more and stays longer. Oman is for someone who values the silence of the desert dunes over a loud theme park.
One would imagine that Oman caters to the wealthy European, American, and Arab alone. But in 2025, the Chinese made up the bulk of tourists. This is partly because of the air bridge that Oman built to China. Beijing and Muscat have direct flights thanks to China Eastern Airlines, and this has made a real difference in tourism.
There is already a spike in Chinese visitors by 272% in 2023, and the growth has been astronomical in the first half of 2025. The 14-day visa-free entry for Chinese citizens has made the desert nation a paradise for wealthy Chinese explorers.
This is not to say that Europeans are not coming in anymore. In fact, air traffic capacity from Italy is up 31%, and we have seen a staggering 253% increase from Russia. To house these discerning guests, the hospitality sector is expanding in a very deliberate way. We are not just seeing more hotel rooms; we are seeing a shift towards luxury, too, as 54% of the new hotel pipeline is in the “upper-upscale” and high-end segments.
Already, there are luxury hotels for the ultra-rich set up in Oman. For example, do you want butlers serving you while you lose yourself in a drink, while admiring the beauty of the blue ocean? If so, St. Regis Al Mouj Muscat Resort, established in 2024, is the place to be. It’s the pinnacle of exuberance, just like the Mandarin Oriental hotel. The latter has 150 luxury rooms and 155 branded residences.
When others build, Oman conserves. And this is the key to their tourism strategy. For example, around 50 km southeast of Oman is Bandar Al Khairan, a beautiful secluded coastline with isolated islands, breathtaking limestone cliffs, and turquoise waters. It has now been designated as an Environmental Tourism Zone. The government could allow builders to encroach on these ecologically sensitive lands and let private developers make some money. But they have made it a protected zone and are choosing sustainability instead.
Minor Hotels runs a very beautiful Anantara resort in this area. They have only 121 keys, including chalets and villas in the mountains, aiming for lower traffic so that visitors can truly experience nature without distraction.
In 2025, eco-tourism and adventure travel are buzzwords. The Environment Authority will use OMR 44 million to develop and manage seven nature reserves, including the “Stars Park Project” in the “Al Hajar Al Gharbi Starlight Nature Reserve,” which capitalises on the growing global interest in stargazing and astro-tourism. Oman’s not just looking for profit; it’s leveraging its uniqueness for sustainability as well.
Tunnels, tracks, and the future of travel
You cannot run a modern economy on dirt tracks and optimism. Oman knows that goods and passengers cannot move efficiently without high-quality infrastructure. In May 2025, Oman is experiencing a massive construction boom. The focus is on the “Hafeet Rail Project,” a joint railway network between Oman and the UAE, which is expected to significantly increase visitor traffic in Oman.
The railway project is almost 70% complete as of early 2025, and at present, the crew is drilling a tunnel through the rugged mountains of Al Hajar in Buraimi Governorate. When this project comes to a conclusion, the port of Sohar will be connected to the emirate of Abu Dhabi through the 238-kilometre-long rail line. A person who lands in the UAE will be able to reach Sohar in just 100 minutes on super-fast trains. This helps to package both the UAE and Oman as a single trip for tourists.
The airports are already brimming with tourists, and in January 2025 alone, Muscat International Airport handled over 1.2 million passengers. Even Salalah Airport in the south saw air traffic there jump by 9.3% in the first quarter. It’s proof that efforts to make Dhofar a year-round destination are bearing fruit. Tourists are arriving irrespective of the season. There is the bustle of the usual three-month Khareef monsoon season, and also in winter, for the sun and the pristine southern beaches.
Along with rail lines and air traffic, roads are also being developed across the sultanate. In 2024, the government paved over 16,000 kilometres of roads. It’s incredible because it’s not even a halfway milestone, as they plan to pave another 17,000 kilometres.
There is talk about roads in places like Al Jabal Al Akhdar, the “Green Mountain,” and Jebel Shams, the highest point in the country. The government is building these arterial roads to connect even remote villages to the tourism economy.
It’s not that Oman has no futurism like Dubai and is only focusing on conservation. It has also carved out a part of its land for such a purpose. Sultan Haitham City in Seeb is a futuristic city which will cover 15 million square metres and will house 100,000 people. Contracts worth OMR 228 million have been awarded by the Ministry of Housing and Urban Planning for phase one of infrastructure development. This includes everything from the electricity and water grids to a smart-city backbone with district cooling and fibre networks.
By May 2025, construction will start in the neighbourhoods of Al Wafa and Wadi Zaha. The city will have 2.9 million square metres of green space and a massive 7.5-kilometre wadi that acts as a natural park. The sultanate is betting big on Omani urbanism as the future of cityscapes. The construction in the area is providing a massive boost to the local economy, and Oman is becoming more connected to itself than ever before.
Integrated real estate revolution
In May 2025, we are seeing a level of interest from global investors that would have been unthinkable a decade ago. The sector is moving away from old-fashioned stand-alone buildings and toward Integrated Tourism Complexes (ITCs). These are gated, master-planned communities that offer a high-end lifestyle, world-class amenities, and, most importantly, freehold ownership for foreigners.
Buying property in an ITC is currently the most secure way for a non-Omani national to own real estate in the Sultanate. It gives you full title deeds and makes you eligible for an Omani residency visa. This has been a massive draw for expats living in the GCC and for international buyers looking for a stable investment in the region. Al Mouj Muscat remains the market leader in this space.
It is a mature, vibrant community with a marina, a golf course, and now the new St. Regis resort. Rental yields in Al Mouj are some of the strongest in the country. For example, a two-bedroom apartment there typically rents for around OMR 709 per month, making it a favourite for “buy-to-let” investors.
It isn’t just Al Mouj; there is also Hawana Salalah in the south, emerging as a potential competitor. Salalah is a popular year-round destination and sees a huge demand for holiday rentals. Investors in Hawana Salalah can often see gross rental yields between 8% and 10%. It’s very competitive compared to other major cities in the Gulf. It offers a different lifestyle, more focused on the beach and nature, and the entry prices are more affordable than those in the capital.
Destination with a purpose
Oman’s growth is just that, and it does not wish to compete with Dubai, Qatar, or Saudi Arabia. It makes no noise and silently goes about making incremental gains. It’s rapidly weaning off oil and is going big on tourism, and has moved towards self-sufficiency through agriculture and fisheries.
Oil is still the major contributor to the economy, but the trend is changing fast, and the return to investment-grade status has opened the doors to global capital. The tourism strategy is working because it is honest and does not try to be something it is not. By focusing on “Quiet Luxury” and environmental preservation, Oman has carved out a unique and highly profitable niche in the global travel market.
The infrastructure projects we see today, from the tunnels of the Hafeet Rail to the smart grids of Sultan Haitham City, are the physical manifestations of “Vision 2040.” They are the backbone that will support a more connected, urbanised, and modern society. And the real estate market is the primary beneficiary of all this progress. Whether it is a cliffside villa at AIDA or a net-zero townhouse in Yiti, the options for investors have never been more diverse or more compelling.
But perhaps the most important takeaway is the sense of balance. Oman is modernising, yes, but it is not losing its soul in the process. It is building for the future, but it is doing so with a deep respect for its heritage and its natural beauty. For those of us watching from the outside, it is a fascinating case study in how a country can transform its economy without losing its identity. As we move toward 2030 and beyond, the Sultanate of Oman is no longer just a place to visit. It is a place to invest, to live, and to witness the birth of a new Arabian era.