Oman’s construction industry is projected to grow by 3.6% in real terms in 2025, driven by increasing foreign direct investment (FDI) and significant government spending in key sectors such as manufacturing, energy and transport.

According to a recently published report by UK data analytics firm GlobalData, the anticipated growth follows a rise in FDI, which increased by 18.2% year-on-year in 2024, building on a 25.2% increase in 2023, as reported by the National Centre for Statistical Information.

The Finance Ministry's Financial Performance Bulletin, released in late May 2025, indicates that public expenditure in Oman rose by 4% year-on-year in the first quarter of 2025, reaching approximately RO2.8bn ($7.2bn).

Of this total, development expenditure by ministries and civil service units amounted to about RO254m ($660.6m), representing 28% of the total development allocation for 2025, which stands at RO900m ($2.3bn). This increase in development spending aligns with the government’s strategy to stimulate economic growth and support Oman Vision 2040.

State spending

The construction sector's growth is further bolstered by the 2025 state budget, which totals RO11.8bn ($30.9bn) and aims to foster balanced economic development while ensuring fiscal sustainability. Looking ahead, the construction industry is expected to maintain an annual average growth rate of 4.4% in 2026-29, supported by investments in renewable energy, transport and housing.

In a significant development for the construction sector, the Transport, Communications and Information Technology Ministry signed 18 agreements worth over RO100m ($260.1m) in May 2025 with several domestic companies. These agreements focus on enhancing infrastructure through the construction of ports, airports and logistics zones, which are expected to improve the competitiveness and operational efficiency of Oman’s logistics sector.

The government also announced plans to construct over 60,240 new homes and 5,857 hotel rooms by 2030, as part of its national development strategy. This initiative is expected to support the growth of the residential construction sector, which is projected to grow by 2.7% in 2025 and maintain an annual average growth of 3.4% in 2026-29.

Sector-specific forecasts indicate that commercial construction will expand by 2.5% in 2025, driven by rising tourism activity, while the industrial construction sector is expected to grow by 3.6% this year, supported by investments in manufacturing facilities. Infrastructure construction is projected to grow by 5.7%, bolstered by government investments in road and airport upgrades.

The energy and utilities construction sector is also set for expansion, with an estimated growth of 4.1% in 2025, fuelled by increasing FDI in the oil and gas sector and investments in renewable energy projects. Institutional construction, driven by investments in healthcare and education infrastructure, is expected to grow by 2.6%.

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Distributed to senior decision-makers in the region and around the world, the June 2025 edition of MEED Business Review includes: