‘Public-private joint ventures can boost Oman's real estate’
September 14, 2015 | 9:48 PM
by ELHAM POURMOHAMMADI [email protected]
Taminat commercial building in Muscat.

Muscat: A public-private partnership can help attract additional foreign investment into Oman’s real estate market, says an official at Cluttons property consultancy.

“A private-public partnership might be a good way to do the things. It does not always have to be funded by the government, particularly when we are in an environment when credit availability is low,” said Faisal Durrani, head of research at Cluttons.

Speaking to Times of Oman, Durrani said there has been ‘very limited’ global interest in real estate development in Oman, other than from a handful of Gulf developers, who are predominantly from the United Arab Emirates (UAE).

However, on an individual basis, Oman’s residential market in particular, remains quite popular with expatriates, especially from the Emirates, he noted.

Expatriates are keen to buy a property in Oman for their retirement because they then receive a residency visa which is renewable, Durrani said, adding that this opportunity is not available elsewhere in the region.

Durrani believes that offering shares and schemes can help entice foreign investment, which brings with it best international practices and ‘place-making’ expertise to create a community that people aspire to live in.

Philip Paul, head of Cluttons Oman, attributes the limited foreign investment in the Sultanate’s real estate sector to the size of the market, which is still fairly small compared to the market in some neighbouring countries.

For instance, it may be difficult to purchase good plots at the right price, he said, adding that it is a challenge for global developers to come to Oman and make a difference.

Real estate index

Asked if the recently launched Muscat Real Estate Index will help regulate the market, Durrani said, “For markets here, an index is a really important tool. However, there is a very fine line between heavy-handed regulations and a market that has no regulations.”

“In the emerging markets where the concept of property ownership is quite new and you have a lot of international investors, or investors who are not based in the country, an index plays an important role in improving market transparency and serves as a parameter both for buyers and sellers or vendors,” he noted.

However, he explained that the effectiveness of an index depends on how well enforced it is by the government.

“There has to be a collective effort by the government or the private sector to use it as a tool,” Durrani said, adding that it should also be taken into account that no index can be perfect, as each property is unique.

Market forces

The head of Cluttons Oman says that market forces can find their way through, and the market is big enough to respond to different situations.

Some six or seven years ago, there was a rapid inflation in prices, but supply and demand caught up with that, Paul said, adding, “I do not know whether the index is going to be a subtle enough tool for people to use efficiently.”

‘Omanisation not to result in lower demand for apartments, rent decline’

Muscat: Omanisation is not expected to lead to lower demand for apartment spaces and decline in rent prices, says an official at Cluttons real estate consultancy.

The Omanisation policy has been in place for many years but the expatriate population is growing, as does the Omani population, Philip Paul, head of Cluttons Oman, told Times of Oman. “That is maybe rebalancing towards Omanis,” he said, adding, “We are seeing more nationals coming into the apartment market. Apartment living is quite attractive to the younger population.”

The consultancy activities of Cluttons Oman is set to get a boost with the recent appointment of Faisal Durrani in London as head of research at the leading international property consultancy. “For emerging markets like the ones in the Middle East, research plays quite an important part in helping to boost market transparency. It is one of our goals to use research as a tool to improve market conditions,” Durrani said.

He added that Cluttons has been advising developers and land owners on what is being demanded in the market and what people can afford.

“On the other side of the equation, you have got end users who might sometimes have quite unrealistic expectations in terms of what they can find and what they can afford. So it is important to keep people aware of what markets are doing,” Durrani noted.

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