Until recently, Duqm was an isolated coastal village but the last five years have seen the Special Economic Zone Duqm (SEZD) start to gain real momentum in its development into an industrial port city of potential global significance.
SEZD is the largest economic/free zone in MENA with an area of 2,000 sq km. Its location on the eastern coast of the Sultanate of Oman, 450km the south of Muscat, provides it with major strategic locational advantages in terms of being on the doorstep of some of the busiest global shipping routes linking into the Gulf, Asia, East Africa and Europe while being outside the Straits of Hormuz.
The dry dock, owned by the Government of Oman and operated by Daewoo, started operations in 2011 and has subsequently developed into a facility of global significance.
Port of Duqm, a joint venture between the Omani Government and Port of Antwerp, started operations in late 2012 and has since evolved into a world class deep sea port. A clear focus for Port of Duqm is to become a major transhipment hub for containerised, dry bulk, liquid bulk and automotive cargoes, while also allowing the efficient export of oil and minerals. The port has also developed as a significant regional facility for the US, British and Indian navies.
Perhaps of greatest significance is that SEZD’s first oil refinery, a joint venture between Oman Oil Company and Kuwait Petroleum International, is expected to start production in Q1 2022. The refinery is key to providing the feedstock for many heavy and medium industrial plants, and has the potential to generate significant industrial development in Duqm.
Also key to driving industrial development is the provision of suitable energy sources. A pipeline connecting with the natural gas fields to the north west of Duqm is under construction while a new power station and a desalination plant are projected to be completed in 2021.
In addition to usufruct agreements (the right to use the property of another) for and construction of various standalone industrial projects over recent years, 2016 saw Oman Wanfang sign a usufruct agreement for 11.7 sq km of land for industrial development as part of China’s One Belt, One Road initiative. This was projected to attract in excess of US$10 billion of Chinese investment over the subsequent five to 10 years.
Incentives for investing in SEZD include 100 per cent foreign company ownership, a corporate tax exemption for 30 years, no minimum capital requirements and renewable 50-year land usufruct agreements at competitive rates.
In our opinion, the development of SEZD is starting to gain significant momentum with the building blocks rapidly being put in place to allow the project to take full advantage of its strategic location and evolve into an industrial port city of global significance. For real estate investors, all this translates into opportunities to deliver industrial and logistics facilities, staff accommodation and residential properties. It is certainly an emerging location that both investors and the industrial and logistics sectors should keep a watchful eye on.