Oman’s Property Market at an Exciting Crossroads

12.10.16

Oman’s property market is at an exciting crossroads. It can move forward as a vital ingredient in the economic growth and prosperity of the country to everyone’s benefit. Conversely it could slow the pace of development and stifle the prospects of growth that are now clearly being felt by most industry sectors.

Emerging from a period of relative stagnation following the global economic correction, Oman’s property market now faces many challenges that need to be addressed in a focused and forward thinking manner.  If the Sultanate’s economy is to grow in line with its forecasts, real estate will benefit from being viewed as an industry in itself, not as a by product of other sector’s growth. Globally, real estate has added billions to many countries GDP’s and yet has continued to meet its underlying social responsibilities of housing the population for residential or commercial purposes. And one of the underlying factors in this industry growth apart from population growth – cross border investment.

Oman has made great strides in opening up its doors for allow foreign direct investment into real estate. The Integrated Tourism Complexes were timely and their initial offerings attracted a healthy flow of foreign income into the country, adding to the wealth in an open yet controlled manner. Yet there is now a danger of their floundering under increasing amounts of bureaucratic procedures that have to be followed by buyers and sellers. Sometimes questionable regulations and as yet untested laws governing  the management of these ITC’s are also open to worldwide scrutiny and need resolving as priority if we are to continue to attract foreign investment to support these development’s full tourism potential.  Several important and significant ITC developments are due to launch over 2017 and these will add to the Sultanate’s prominence as a strategic real estate player on the global stage.

Oman should not be afraid of foreign investment into its real estate – it should welcome it with open arms. Foreigners can never physically take away the land, they can however add to the economy by owning a home, paying for their use of local services and adding to the all-important retail industry here.

2016 has seen continued high levels of residential rental activity, particularly in the mid to high end budget sectors. A surge of new arrivals, most notably from the hydrocarbon industry sectors ensured demand for quality homes was high and supply, at times, was not sufficient to meet this demand.  Properties within the ITC’s, most notably The Wave and Muscat Hills have leased fast, at rents considerably higher than in the preceding year.

Values have in the main now returned to their 2009 peak levels, reflecting the re-establishment of a demand / supply balance for most sectors of housing.  Quality villas, especially in the ITC’s remain short in supply and this will likely lead to general rental increases over the year until such time as the villas currently under development are completed and enter the rental market.   The newer establishing areas such as Bausher and Al Muna now offer attractive rental rates as compared to their more central neighbours. Improvements in accessibility, particularly as a result of the Muscat Expressway have made these previously “secondary” areas highly demanded over recent months and they are fast evolving as preferred living zones.

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