Cluttons: Oman rentals fall 2.3% in Q3 2016
The total decline in average rental rates amounted to 8.1% for Oman's residential market in 2016
Average rental rates fell by a further 2.3% during the third quarter of 2016, bringing total decline for the year to 8.1% for Oman's residential market, according to new research by international real estate consultancy, Cluttons.
The Cluttons Winter 2016/17 Property Market Outlook report for Muscat reveals that on an annual basis, the weakest performing residential submarket was Shatti Al Qurum, where rents fell 21.1%, followed by Sur Al Hadid (-20.8%) and, Qurum (-17.9%).
On a more positive note, during the third quarter rents remained unchanged in two submarkets, Bausher and Sur Al Hadid.
Al Mouj remains a residential stronghold with rents down just 5.9% over the last 12 months, standing at an average of $2,078 (OMR800) per month. Similarly, Cluttons expects the new 615 unit Taminat residential scheme in Bausher, by the Public Authority for Social Insurance, which will be delivered to market in early 2017, to also command strong interest due to its mixed use offering and central location near three of Muscat's largest shopping malls.
For the rest of the residential market, Cluttons still predicts further corrections.
Faisal Durrani, head of research at Cluttons, noted: “The prospects for an immediate turn around in the residential market remain unlikely and, given the country’s heavy reliance on the oil and gas sector, outlook for the residential market remains weak. During spring, we forecast residential rents to end the year 10% to 15% down overall and it appears we are on track to achieve that, reflecting the average decline in tenants’ budgets of 10% to 20% that we have recorded this year.
"More positively, the government is clearly working hard behind the scenes to drive more efficient spending, while at the same time undertaking sentiment boosting mega projects such as the recent tendering for the first phase of Oman Rail and the progression of works related to the USD 1.3 billion redevelopment of Mina Sultan Qaboos. Projects such as these bode well for future demand for residential property, but for now, the outlook remains subdued."
Cluttons reports no quarterly change in office rents across the six submarkets monitored during Q3. On an annual basis, Qurum and Shatti Al Qurum stand out as relatively stable markets with no change in rents over the last 12 months.
These two submarkets appear to be the most desirable due to a high concentration of Grade A office stock, which remains in finite supply.