Construction

Oman warned over rising construction costs

Oman Society of Contractors warns that profit margins could be eroded by new regulations and rising wages

Construction costs in Oman are predicted to rise over new regulations and rising wages.

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A number of new projects, concentrated on bolstering Oman’s infrastructure backbone, are currently on the order books of domestic construction firms. But industry insiders have warned new regulations and rising wages bill costs could see profit margins eroded.

The Oman Society of Contractors (OSC) says the sector is one of the largest employers in the country, with more than 55,000 local staff. With the continuing surge in the building activity, the OSC estimates that the number of Omanis employed by contractors will rise to around 65,000 in 2013.

As part of its programme to expand and diversify the country’s economic base, the government has committed billions into transport and utilities projects, including a $15bn national rail network and a series of new power stations to feed Oman’s growing industrial and private sector demand, alongside several social services developments, such as hospitals, schools and housing.

While this rise is a sign of the growing momentum within the sector, it is also a reflection of the impact of a new government policy that aims to increase local employment.

In early February, the government announced it would be capping the number of foreign workers at 33% of the Omani population but did not set a deadline to meet that target.

Currently it is estimated there are some 1.3m expatriate workers in Oman, representing just under 40% of the population.

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