The importance of location
I have been involved with real estate for most of my life, and as some readers will know, it is the reason I came to Oman back in 2006. Location is undoubtedly the factor which most influences the value of property, and this critical driving force is quoted (and mis-quoted) by estate agents the world over.
I was reading an article in The Week, a UK publication I subscribe to. It was a fascinating commentary on the current residential market in London, and particularly how the recent injection of foreign money into 'prime' London homes has resulted in a 42 per cent rise in values since 2009, during a time when other parts of the UK have seen values fall.
London, of course, offers the foreign buyer the city, fashion, art, sport, and investment in pounds, not euros. The article identified three main types of buyers who are buying property in London. Firstly, the rich from Russia, the Middle East and Africa, attracted by a stable market compared to circumstances in their own countries. Secondly, wealthy Americans and Europeans, who prefer to invest in the property pound. The richest individuals in Greece, Spain and Italy, keen to avoid domestic austerity measures and new taxes, are flocking to London.
And thirdly, Asian buyers, who are benefiting from the fact that their own currencies have risen significantly in value against the pound in recent times. This currency variation means that for Chinese buyers, for example, London prices appear to them as having fallen 24 per cent since 2008. The consequence of these three factors is that of the 20 most expensive properties sold in 2011, 19 went to international buyers.
So what can be learned from this, for us here in Muscat? Every single Omani I know is keen to own land, to build a house or two, and to create some value for himself and his family. Much time is spent in the majlis or under a tree, drinking coffee, eating halwa and dreaming of property deals. Omanis can buy throughout the city, with the best locations in Qurm, Shatti and Madinat as Sultan Qaboos commanding high prices. New areas around Seeb, Al Khoudh and the airport are priced lower, and could possibly experience a high percentage rise in value over the next few years - but nothing is guaranteed.
For the expatriate, there are places in the city where residential property can be bought and freehold title granted. Prices of these properties, because choice is limited, are generally higher than in other parts of the city. The key to values here is the quality of the property itself, of the neighbourhood, and availability of finance at realistic interest rates.
For all, the decision to buy does start with location, whether you are one of the international rich buying in London, or an Omani or expatriate buying in Muscat. For us here, the market is not as mature as some other parts of the world, so it is important to carefully consider the price of the residential property you may be interested in and what may happen to that value in the future. The fact that taxes are not levied on any capital gain, or indeed rental income, is also a significant advantage to be considered during your next debate over a cup of coffee with friends.
Nick lives and works in Muscat and the views expressed in this column are entirely his own. You can e-mail Nick at firstname.lastname@example.org