Report: Muscat residential sector bottoming out
The slowing rate of rental declines in the first quarter suggests the first signs of the Omani residential market gradually bottoming out, expert says
Rents in Oman’s capital dropped by 0.6% in the first quarter of 2017, showing a better start to the year compared to 2016, which saw average rents across Muscat dropping about 10% annually.
According to a recent Cluttons report, movement in rents have improved the year on year change to -7.0%, which is the best annual performance in 18 months. This suggests that some locations in the city may be starting to show signs of bottoming out.
Philip Paul, Head of Cluttons Oman, said: “Increasingly, the work Cluttons’ team in Oman is focused on is the stabilisation, or boosting of revenue potential for landlords through professional management and active management of tenants, as landlords are increasingly recognising the need to be flexible.
“At the same time, 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.”
Faisal Durrani, head of research at Cluttons also said that due to slower GDP growth expected this year across GCC countries, job creation rates and increases in the level of requirements for rented accommodation will remain low.
GDP growth in Oman specifically is forecast to slow to 0.4% this year, from 1.5% last year.
This being the case, he said: “The slowing rate of rental declines in the first quarter suggests we may at last be starting to see the first signs of the market gradually bottoming out.
“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,” he added.