Muscat: Key tourism projects like new mega-malls have created an increase in rents and land values, experts say.
Despite a poor 2017/2018, when rents in some areas dropped by as much as 23 per cent, the market is beginning to see small signs of recovery, especially in and around areas being developed for tourism.
Despite the drop in rent prices in some areas of Muscat between 2017 and last year, the Sultanate’s rental market had a better first quarter of 2019.
Speaking to Times of Oman, Hassan Al Ruqeishi, Head of the Real Estate Development Committee at the Oman Chamber of Commerce and Industry, said: “The situation in 2019 is better than last year as it has become more stable and improved by between 2 per cent and 4 per cent.
“This year, many commercial and industrial areas are witnessing an increase in demand, which has led to stability in prices. For example, in Mabela next to Mall of Muscat there has been a significant rise in demand. “
“People are becoming more familiar with the financial situation, and it is leading to stability.”
A 2019 Property Report, by real estate experts Al Habib, revealed that although rental prices across all of Muscat’s major areas had fallen compared with 2017 figures, prices in Amerat, Ghala and Wadi Kabir had dropped by as much as 23 per cent in 2018.
An 18 per cent drop in rental rates was recorded in Bausher, Mabela, Mawaleh and Al Khoudh, with 13 per cent reductions reported in Al Falaj and Ruwi, among others.
The rent reductions can be partly explained by the number of white-collar expatriate workers leaving the country to be replaced by Omanis, who prefer not to rent, according to the Al Habib report.
“In general, Oman has one of the highest rates of home ownership in the world and Omanis prefer to live in their own homes, sometimes in extended families, until they are able to buy or build their own houses.”
The report went on to predict tenants choosing to move into those buildings and areas that offered them easy but affordable access to the facilities they needed on a daily basis.
“It can be clearly seen that rent reductions are smaller in popular locations like the Central Business District, Qurum, Al Khuwair and Ghubra,” revealed the report.
“They have come down much more in Wadi Kabir, Ghala, Amerat and the areas beyond the airport. Owners who have been quick to adjust rents downwards, and who offer good maintenance services, are enjoying higher occupancy rates than those who are less flexible on rents and who do not maintain their buildings well.”
The report added: “Location is also a key factor, with rents and occupancy in popular locations declining less than those in other locations.”
The latest figures show that the number of residential building permits granted in the country also dropped, from 34,925 in 2015 to 24,149 in 2017.
Fahad Al Baloushi, a real estate investor, said: “Because of the decline in rentals, a number of citizens are looking for homes instead of apartments because the prices of villas have dropped. In addition, we noticed that a number of people want to own apartments instead of rent.”