Sunday 02 / February / 2025
Muscat: New rental contracts for homes in Muscat jumped by more than 35 percent in 2018, as tenants looked to move into buildings that offered better facilities for lower rents.
The annual report by Muscat Municipality shows that the real estate sector witnessed a significant increase of 35.5 percent in terms of rental contract signed in 2018, compared to 2017. 25,499 new residential rental contracts were registered with the municipality in 2018, while cancelled rent contracts also jumped by 27.58 percent.
Hassan Al Ruqeishi, the head of the real estate development committee at the Oman Chamber of Commerce and Industry said, “This happens when the cost of rents go down, since tenants are always looking for a property with better features, at a lower price and with new facilities. The rise in the registration of new contracts is not a measure of the increase in market activity as the growth in the cancellation of contracts achieves a balance in the market.”
In addition, Fahad Al Ismaili, the founder and CEO of Tibiaan Properties, told Times of Oman, “The increase in the number of new rent contracts is due to internal migration between buildings. We have noticed that most of the new contracts are for people who have moved from old buildings to new ones. The prices of new buildings have become lower with better features in terms of location and facilities and services, so they get more value for money if they move”.
He went on: “The second reason for many of these new contracts is rent adjustment. For example, if someone who was renting an apartment for OMR400 negotiated with the owner of the building to reduce the price to OMR 300, this requires the registration of a new contract with the new conditions. This is not a renewal, although the tenant is still in the same apartment, but a new contract”.
Among the contracts cancelled, Al Seeb ranked first with a 191.4 per cent increase followed by Al Amerat at 13.3per cent and Bowsher at 4.9 per cent, whereas the number declined by nine per cent in Quriyat. On the other hand, the rate of renewing contracts increased by 9.5 per cent in 2018 compared with 2017.
Um Abdullah Al Khadouri from Al Sahu Real Estate Company said: “Due to the poor demand for rental properties, many landlords have decided to reduce the cost of rent in order to fill the vacancies so that the building will not be empty for a long time.”
She added: “A property that was previously rented for OMR 250 went down to OMR 100. There are apartments in Al Khuwair I rented previously at OMR 500, but now, these contracts do not exceed OMR 275. The reduction of rents included most of the Wilayats in the governorate, especially Ruwi, Muttrah and Wadi Al Kabeer. Previously, we were sticking to the earlier prices in the hope that the situation would improve, but with the market situation we decided to reduce prices.”
Fahad Al Ismaili added: “Lowering the rent helps the landlords get tenants faster, and this methodology has been followed by many investors in the real estate market,” Hassan Al Ruqeishi , however, said that real estate was expected to have an increase of about four or five percent in its activities in 2019.
“The real estate market needs everyone to join forces in order to create robust activity that contributes to strengthening the pillars of the national economy,” he explained. “The government should study the situation thoroughly and only assume the role of regulator. This would allow the institutions of the real estate sector in all its forms to take part in the decision-making process and find appropriate solutions. The government could then take these proposals and ideas into account and accelerate implementation to lift the real estate market from its current situation.”
Tenants Times of Oman spoke to said they were looking for more affordable alternatives that provided better facilities. Sudeep Goyal, an Indian expat, said he was able to find fully furnished accommodation in Bowshar for half the price at which it was being offered in Bait Al Falaj.
“I was raised in this part of town, so I wanted to find a flat there. When I went to the landlord in Al Falaj, he told me that I would have to pay OMR 500 for a fully furnished one-bedroom apartment. There are however these newer buildings in Bowsher, where everything is located so close by, and I only need to pay OMR 280 for this, so it makes much more sense.”
Another expat, Mohammed Masoud, added that he had looked for houses in Qurum, but found them to be far more affordable in Mumtaz Area. “I was looking for a place of my own as I am recently married, and was initially looking at Qurum, where the rents were, honestly, a bit steep. I went to Mumtaz Area and they were offering two-bedroom apartments for far cheaper rates. I pay about OMR 235 for my apartment and this is really affordable.”
