Oman: Residential rent market under pressure in Q1
Over the last couple of years, a large supply of new quality apartments has penetrated the residential market in Muscat
The residential rental market continued to be under pressure during Q1 2016 as companies are trying to adjust to the market conditions and minimise expenses by reducing headcount and housing allowances, according to a report.
According to a recent study by consultancy house PKF, due to the slowing economic growth, demand for rented accommodation and particularly larger housing units has decreased, resulting in a 12.7% Y-o-Y decline in average residential rents during the first quarter.
Over the last couple of years, a large supply of new quality apartments has penetrated the residential market in Muscat, which, however, was absorbed quickly due to a sustained growth in the expat population and increasing demand for smaller-sized units.
As a result, vacancy rates across the villa segment increased, leading to a 14.1% Y-o-Y decline in average monthly villa lease rates, said PKF.
With regards to the residential sales market in Oman, the prevailing regional economic uncertainty and the decline in disposable household income levels have resulted in vendors decreasing property sales rates to entice demand from potential buyers.
As a result, the number of sales contracts during Q1 increased slightly by 0.3% to 20,963, when compared to the same quarter in 2015 according to the National Centre for Statistics and Information, it added.
Despite the increase in transactional activity, the total traded value of property in the sultanate amounted to $2.3bn (OMR922.1m) in Q1, representing a y-o-y decline of 30.3%. The quarter also witnessed a 39.5% fall in the number of properties issued for GCC nationals.
Oman's Integrated Tourism Complexes (ITC) and more specifically Al Mouj and Muscat Hills continued to register high occupancy rates, as ITC developments remain the only places in the country where non-GCC nationals are permitted to own a property.
On the retail sector, PKF said the demand for retail space across the shopping malls in Oman remained robust during Q1 2016, supported by the increase in the country's population, which at the end of March 2016 totalled 4,397,790.
The growing consumer awareness as well as the increasing demand for international brands and improved shopping environment has prompted developers to invest in expanding Oman's retail sector, which currently has the lowest retail GLA per capita within the GCC region, standing at 0.09 per sqm.
The rapid growth of the sector, however, may also result in a potential supply-demand imbalance, leading to an increasingly competitive market and increase vacancy rates across prime mall locations.
Currently, demand indicators outstrip supply growth, resulting in stable occupancy rates across prime shopping malls