Mubasher: Landlords are at the mercy of tenants in Oman, as subdued economic activity and low demand force flexible, innovative, and revised approaches onto the market to entice prospective tenants, according to a report.
The Cluttons Muscat Spring 2017 Property Market Outlook identified an increasing flexibility of finance terms, along with a deliberate focus on best-in-class property management services, as landlords work to ensure high occupancy rates at a time of weaker demand across the real estate market.
During 2016, average rents across the Muscat residential market receded by 10.1%, while during the final quarter of last year, rents declined by 4.2%, leaving average monthly rents just shy of OMR 700.
Rents during the three months to the end of March 2017 have been declining on average by a marginal 0.6%. The limited movement has improved the year-on-year change to -7.0%; the best annual performance in 18 months, suggesting some locations may be starting to show signs of bottoming out.
Philip Paul, head of Cluttons Oman, commented: “Tenants are aware of the opportunities for more value in the market, so those landlords that are taking a more proactive approach to the conditions are the ones best placed.”
Meanwhile, Faisal Durrani, head of research at Cluttons, noted: “For now, our baseline view is for rents to dip back by between 5% to 7% during 2017, which assumes little change in rents over the next three quarters. This is arguably the most stable outlook for Muscat’s residential market in almost two years.”
Weaker market conditions have continued to undermine office rents across Muscat, the Cluttons report showed.
“Across the board, rents currently sit at fresh historic lows and are roughly 60% down on the market peak of 2008. The short-term prospects for the office market are certainly weak, with rent corrections on average of 10% or 15% likely this year,” according to Paul.
“The defiant beacon of success” during struggling market conditions across the GCC is the hospitality sector. The outlook is for the direct contribution of travel and tourism to grow by 6.1% per annum over the next 10 years to OMR 1.344 billion by 2026. Paired with the completion of a $1.8 billion airport in Muscat, the sector is expected to lift overall economic sentiment, the report stated.
