Oman: New projects ease housing woes
By staff - Sat May 14, 12:58 pm
Oman’s real estate strength stems mainly from both proactive government investment, foresight and the market forces here. The country’s growing population means housing demand will continue to rise. Approximately 73 per cent of the country’s population is now urbanised. As a result, massive demand is there for residential leasing sector with positive growth in the number of tenants seeking housing in comparison to previous years. The higher demand is the result of establishment of more and more companies and expansion of the existing ones creating more jobs.
When allied to the trend of Muscat to expand westwards due to topographical constraints, the result has been an increasing need for housing affordable in areas such as Al Khoud, Maabela and Seeb. The development of the western part of the capital has also received a significant boost from the opening of the Muscat Expressway which has increased the area’s accessibility, and significantly improved the travel woes.
At the same time, thanks to the increasing amount of supply, price-driven rents have dropped over the last few months. To add to this, tenants have now a wide range of choices with many new apartments and villas coming up in the city area. In contrast to the past, the new buildings have more quality and amenities.
According to experts, the decrease shows the reflection of demand/supply dynamics suggesting that the property market has crossed the equilibrium. This trend is expected to continue in the coming years with many more building projects coming up in the capital area.
Rental values have continued to soften although the rate of decline has started to level off. Some areas have been harder hit due to the quality of the area or the properties available. Rates are variable and relative to the area with micro markets developing within each area.
Further softening of rental values is expected in the short to medium term, particularly as the supply of new apartments comes into the market, according to reports. The long term outlook is that the market should start to show signs of recovery as the economy continues to expand.
The Wave project has been a huge success and more projects are in the offing.
Even with the new projects coming up, many landlords are still seeking rent in excess of the realistic market rates.
In Ruwi and its adjoining area demand is high for lease by the middle income group of both local and expatriate community. The business community also contributes to the demand for their proximity to their establishments in the area. Till one year before, landlords in these areas had hay days thanks to shortage of flats leading to high demand. In some cases rise in rent amounted to 300 per cent in the past.
The situation now is that vacancy level in several flats has outstripped the demand with the construction of several new buildings and many more are in the face of completion.
But the fact is that some landlords are reluctant to reduce the rent, rather they prefer to keep the flats locked for what they claim is a ‘prestige’ issue. “Rent once increased will not be reverted, even if we have to keep them locked”, claims one landlord in Ruwi.
Many of the apartments and villas in this area are decades old and they are in a dilapidated condition.
Maintenance is also not done properly. In the current market conditions, it is vital that landowners adopt a proactive approach with more emphasis on achieving and maintaining good occupancy rates rather than concentrating on high headline rental values.
© Oman Daily Observer 2011 + Staff addition