Muscat: Landlords are taking hits in rent prices in order to keep their tenants from moving out, in a market that has dipped, according to experts.
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Falling rent prices in the Sultanate has made moving house appealing for tenants, as landlords struggle to keep existing residents in their buildings.
One landlady said: "I sent every tenant a new contract with a OMR50 a month reduction, without them even asking, because I want to keep the building fully occupied. The location is nice and two years ago there was no issue and I was asking OMR700 or OMR800 for a two-bedroom apartment.
"Now some apartments lay empty for a long time and I’ve reduced the rental to OMR450 a month. I know of villas in Qurum that were on the market for OMR2,000 two years ago and are now lying empty, even though the rent has been cut to OMR1,000.
"The expats who would live in these places just aren’t around any longer. I hope it gets better soon."
Christopher Steel, managing director at Savills, said that the market is now at "rock bottom", with no other way but up.
"I think the market has reached rock bottom already, we are finding that landlords now have come down to levels which they won't reduce any further, so I think it's reached its bottom point now."
A villa owner, who didn't want to be named, said that he had to reduce the rent in his villa due to the fall in rental prices.
"For my villa in Al Ansab, I was renting at a higher fixed rate for six years and did not increase or reduce it throughout that time, until last year when the tenant said that the rental prices have gone down and requested a review, so I reduced the rent to accommodate him," he said.
Steel also explained that the lower occupancy rate has also played a contributing factor in housing prices.
"When the economy slowed, the property market adjusted accordingly and rents have been adjusted for well over a year.
"The reduction rate is down to one-on-one negotiations between the landlords and the tenants. The more corporate landlords have worked out what the bottom line is that they can accept, and they made adjustments on a percentage basis to their entire portfolios to how far they can reduce the rent to the lowest level," added Steel.
Another owner of several villas around Muscat said there has been a clear reduction in rents compared to 10 years ago when he started.
"Over the past few years, I have seen a real big fall in the price of rent. This has led to investors and possible landlords to either slow down or put on hold any future plans of building new properties," he said.
There has also been a change in the payment methods over the years.
"The current trend with tenants seems to be paying every three or six months in advance, as they do not have the funds to pay fully," the owner added.
"The arrangement with my previous tenant was to receive the payments annually up front, however, towards the end of the six years, it was not as regular as the first few years," he added.
Other than reducing the rent to keep tenants, some landlords have lowered rent once tenants had left, in order to attract new occupants.
A property owner in Azaiba said, "Once tenants leave, I drop the rent price because the market tends to be dead. I have done this over a gap of four years, sometimes reducing the rent by 25 per cent."
The villa owner in Muscat advised future landlords on the reality of the real-estate business.
"When deciding to lease an estate, one should bear in mind that the rental of property fluctuates according to the supply and demand of the market. Landlords have to accommodate that, rather than having a mentality of the landlord always getting what he or she wants," he said.