Oversupply continues to impact property rents, prices
Rents and prices in Oman’s residential property market are expected to decline further this year as the market continues to be oversupplied with apartment blocks, according to a new report released by real estate consultancy and chartered surveying firm Cavendish Maxwell.
‘Muscat’s residential market continues to be oversupplied with apartment blocks, while there is still a gap for high-quality villas and townhouses. Rental declines continued during 2018 as overall demand remained subdued’, Cavendish Maxwell said in its annual Oman Property Market report.
The report said that rents and prices in Oman’s residential market are expected to fall further with addition of upcoming supply, as well as the impact of the ban on expatriate visas for 87 occupations.
Cavendish Maxwell’s report, however, said the rental sector has remained relatively stable despite declines of 20-25 per cent over the last three years. It said the pace of decline has slowed and during 2018 there were marginal declines of under five per cent for prime stock.
‘Residential property rents and prices continue to decline in Oman and adjust to muted economic growth in 2018. A combination of factors, including readjustment of salaries and job losses in key sectors, as well as new project handovers, continue to impact the demand’, the report added. Cavendish Maxwell noted that continuous declines in rent have given tenants a stronger position to negotiate terms with owners, who are consequently offering better rents and flexible lease terms. It said housing demand is moving towards more affordable units, causing a stronger rental decline in premium locations.
Cavendish Maxwell launched its annual Oman Property Market report on Monday at an event at Sundus Rotana hotel.
Commenting on the report, Khalil al Zadjali, head of Cavendish Maxwell in Oman, said, “Oman’s real estate market showed slow growth in 2018, but there were improvements in certain areas. Real estate transactions increased 1.2 per cent compared to 2017, although sales contracts decreased by a percentage point. Other significant areas of development have been in the tourism and industrial sectors, with new hotel room inventory and industrial estates expected to be added in 2019.”
Looking ahead to 2019, the report said Oman continues to offer significant investment opportunities, thanks to its growing non-oil economy, particularly in the tourism and industrial sectors, as well as in integrated tourism complex developments.
Highlighting positive impacts of Oman’s new visa regulations for tourists, the report said new regulations and incentives from Oman’s Ministry of Tourism have helped boost Oman’s hospitality sector. The report noted that there are currently 72 hotels under construction in Oman, amounting to a total of 6,604 rooms. ‘By the end of 2019, nearly 55 of those developments are expected to be completed, adding 4,763 rooms to Oman’s hotel supply, providing a much-needed boost to the tourism infrastructure’.