OMAN - Real Estate & Construction
CEO, Al Arkan Construction
Dharmendra Sharma has 23 years of experience managing large real estate and infrastructure projects. He has held senior positions in world-renowned companies like Hindustan Construction Ltd., Lavasa Corporation Ltd., Skanska Cementation, and Unitech India Ltd. He has successfully completed many premier residential, commercial, and infrastructure projects in India. Presently heading Al Arkan’s construction and real estate development business in the Sultanate of Oman, he has a degree in civil engineering from the National Institute of Technology, India, and an MBA from the University of Melbourne.
What short-term trends do you expect in the real estate and construction sector?
There are three segments in the market. There are several major companies spearheading projects worth OMR50 million and above. Then, there are medium-sized companies operating projects worth between OMR2 million and OMR10 million, which is where we fall in. There are also hundreds of companies operating projects that are worth less than OMR1 million. Since 2015, despite the constraints in the market, we have been able to get projects and grow every year by 30-40%. In our segment, there are less residential projects coming in but more commercial projects like schools, hotels, apartments, and so on.
How do you think regional transport improvements will benefit the real estate and construction sector?
Most of the new infrastructure projects are concentrated in the Duqm area. Around Muscat, there are already enough roads, and we don’t foresee many new projects in that regard. The biggest test for the government now is Duqm. All of the big projects and new refineries are there. Once those are up and running, other projects will follow. That’s the area to focus on, and every construction company in Oman is focusing on Duqm. We are submitting bids as well. On the other hand, projects that connect Oman to other GCC countries will obviously give a major boost to all the players. For now, every player is struggling with margins, so a small reduction in logistics costs would help improve our bottom line a lot.
How do you expect supply and demand in the real estate sector to evolve over the next years?
There is an oversupply in the market. Some smart people, however, are finding the right locations and building accordingly. For example, our prices were much higher four years ago compared to now because of market conditions. Our margins are at less than 10% nowadays, much less than before. Anyone who is building is barely getting a return on their investment, but they do that by building at a lesser cost. There are still many people who want to build, and there are a lot of projects coming in. There are always six to seven tenders on our table. There is a lot of desire to build, so people are holding onto their designs and waiting for the right time. At present, we are building more commercial spaces. Even in the residential segment, where we used to see apartments, we are now seeing more villa clusters coming in. One project has around 45 villas in one complex. We are currently involved in a project in Muscat called Rose Village with 39 villas. Some companies are building head offices, and we are doing the same for Al Roya Press & Publishing in Airport Heights. Many schools are also coming in, and we are close to signing a OMR7-million bid with an international school in Muscat.
How is digitalization taking place in Oman’s real estate sector?
New technology is being adopted faster in Oman than anywhere. Companies here are quick to learn, obtain materials, apply technology, and use new methodologies. When I compare Oman with anywhere else in the world, the materials, technology, and equipment being used here are the best of the lot. For example, companies are using 3D modeling and BIM. These technologies are new in Oman, but considering how proactive the construction companies have been, things are moving quickly.
What are your criteria for tendering for new projects?
The first thing we look at is the client and their financial position. This is important because many people start a project but are unable to finish it. If a client’s project funding is properly available and if the project’s size is within the range in which we operate, and we know the margin won’t fall below a certain threshold, we are more likely to bid.