Muscat residential rents fall 4.7% in Q3
While Syrian, Iranian and Iraqi buyers increasingly act
Residential rents across Muscat dipped by 4.7% during Q3 2015, as reported in our Muscat Property Market Outlook Winter 2015/16.
The decline was predominantly led by the villa market with average monthly rents slipping to OMR 1,100, a 5.9% decline, during Q3 and the most significant fall was registered in Azaiba/Ghubrah North (-13.9%).
Philip Paul, Cluttons’ Head of Oman, said: “The primary driver behind the slide in rents has been the sharp growth in supply of perceived lower quality stock in many areas. However, high-quality, well-maintained schemes retained rental values with some even creeping upwards slightly.”
The Saud Bahwan complex was cited as a good example of a development that remains fully let, with a long waiting list, underpinned by more affordable monthly rents, which range from OMR 550 to 625 for a two-bedroom apartment. Strong interest is also anticipated in the Public Authority for Social Housing’s Al Taminat residential scheme in Bausher, which is due to complete later this year.
The report highlighted vacancy rates in Muscat’s two main ITCs – Al Mouj and Muscat Hills – remained exceptionally low due to their appealing modern amenities.
Faisal Durrani, Head of research at Cluttons explained: “Although prevalent across the rest of the GCC, gated community living is still a relatively new concept to Oman. However, the depth of demand from tenants, both expats and increasingly the younger Omani generation, is rising.”
The Oman property market, as a whole, is supported by relatively stable employment levels as oil production continues to be boosted, injecting confidence into the economy, which has also been bolstered by the government’s infrastructure upgrade programme.
Durrani added, “Despite the global slowdown, economic growth is expected to continue albeit at a slower pace than 2014. Residential rents should remain fairly stable over the next six months with poorer quality pockets of stock underperforming. This of course assumes the absence of any major global economic or oil price shocks over our forecasting horizon.”
The sales market on the whole continues to remain very active with developers keen to capitalise on demand by bringing new schemes to market. Anecdotal evidence suggests that mortgage lending continues to tick upwards with demand stemming from GCC nationals and Omani buyers.
Paul continued, “Syrian, Iranian and Iraqi buyers are also securing homes in the Sultanate, drawn in by the prospect of permanent residency and the allure of a relatively small and stable residential market. Typical budgets from this pool of buyers range from OMR 130,000 to OMR 150,000.
“While supply levels are continuing to edge upwards, demand is remaining fairly constant, so it remains to be seen if the upward trajectory in capital values is sustained over the next six months. This is something we will be monitoring closely. For now, it is our view that the rate of capital value rises is likely to slow between now and the spring.’