Muscat: Real-estate players in Muscat expect the spiralling upward trend of commercial space to be reversed in 2013 since rental prices are likely to drop by 40 per cent from their peak rates in 2007-2008. In the case of residential units, the rents are expected to fall by 10 to 15 per cent in some areas of Muscat this year. "This is simply because there is a higher than necessary supply in some areas," stated a senior official of a property leasing and management division that manages more than 2,000 units across Oman.
According to realtors, the skyline of Ruwi is undergoing a rapid change as older buildings make way for new ones to keep pace with the times. "More than 35 new buildings are coming up in areas such as Rex Road, MBD, Darsait, and Wadi Kabir, which is pushing down the rents," said another property manager of a consultant agency.
Echoing similar feelings, Country Operations Manager of Eqarat, Salman Jalil noted that another reason for the drop in rents in Ruwi is because of the huge parking issue. "Most of the buildings don't have their own parking space, and the area is slowly becoming very crowded, with major traffic woes," he told Times of Oman. Eqarat manages close to 1,000 units in Oman.
Jalil pointed out that he personally knew many people who had vacated their flats because there weren't any designated parking spaces. "But in Al Khuwair and Ghubrah, most of the buildings come up with remote-control parking areas, community hall, gymnasium, swimming pool, and other facilities. So there is great demand for these buildings," he remarked.
Real-estate businessmen explained that the owners of old buildings were the hardest hit. "Some of them are really finding it tough to lease their apartments," one businessman said. Reportedly, some realtors are even holding lucky draws offering gold coins to the winners in exchange for leasing their buildings in Ruwi.
However, prices in other residential areas are not likely to change much in 2013, except in Ruwi. "This is because not many new buildings are coming up in places like Al Khuwair and Qurum," the realtors said.
The scene is, however, different in Ghala, Ghubrah, and Azaiba, where a great many buildings are under construction. "But you have to remember that in these places, the demand is high because many companies have moved their operations here from Ruwi in the last couple of years," another real-estate agent noted.
Commercial-space rentals have also taken a hit as a result of the significant amount of space now available or space that is about to become available.
Realtors said rents for commercial space have declined by as much as 30 to 40 per cent from their peak rates in 2007/2008. "In this sector, there is a huge gap since the supply is high and the demand is low," Jalil added. "During the boom times of 2008, a lot of construction had started on large commercial buildings, and we are now starting to see the finished products flooding the market," he stated.
Realtors also said that the rental market in the Sultanate is currently at a very interesting stage and that any fall in rents in the future would depend on the growth of the economy. "Right now, the market is still undergoing change. So, whether the fall in rents is just a temporary phenomenon or whether rents will see a sustained drop to pre-2007 levels remains to be seen," acknowledged a property manager in Muscat.
"Expatriate demographics play a crucial role in the rental scenario, and in the current situation, it looks as if the usual pattern is set to change," he affirmed.