This study intends to gauge the framework of factors and mechanisms that contributed to the restructuring of social setup of Greater Muscat and the thereof ensuing economic, social and environmental disparities between the different residential quarters of the city. In order to produce an approximated model of the old and contemporary social structure of the city, the study used field surveys, interviews, real-estate values and types of housing, in addition to available official data. The study demonstrates clearly that locational criteria of the distribution of households in urban space have shifted from the traditional social values and practices towards predominantly economic estimates that are governed by the environmental comparative advantage of the site, the location attributes, the social content and the level of social amenities. As a result, socio-spatial fragmentation became very conspicuous in the urban space. The study suggests a number of recommendations as regarding urban sprawl, real-estate speculation, gated communities, and the renovation and rehabilitation of deteriorating residential quarters.