Muscat Residential Market Outlook Spring 2015 0 (1)

8/15/2019 Muscat Residential Market Outlook Spring 2015 0 (1)

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Qurum, Ruwi, Al Khuwair and Azaiba/Ghubrah North remainpopular, while monthly rents start from as little as OMR 175 for aone-bedroom apartment in the western suburb of Maabela.

Western expats continue to dominate the bulk of requirementsat Muscat’s integrated-tourism-complexes (ITCs), with mostbeing allocated corporate housing allowances. That said, the lackof school places within the vicinity of ITCs such as The Wave andMuscat Hills is prompting some families to consider alternatelocations. The general shortage of school places may start tocompromise the performance of these two ITCs in particular withtheir full rental potential being curtailed until the authoritiesaddress the problem. For now however, The Wave and Muscat Hillsremain the two most desirable ITCs in Muscat.

Rental market set to be undermined by oil price weakness

With the oil price volatility continuing and the price of oiltrending below USD 50 per barrel, there is now growing concernaround the economy’s ability to sustain the robust level of jobcreation and overall growth seen over the past 12-18 months.

The subsequent impact on the rental market will be a stabilisationor even a weakening in demand, particularly as jobs generated bythe hydrocarbon industry still form the cornerstone of lettingsdemand. In addition, with evidence from the ofce market tosuggest that nervousness from the weakness of oil prices is startingto lter through in the form of stalled expansion plans, the rate of job creation is expected to slow over the course of the year.

Furthermore, with new supply starting to trickle into the marketat The Wave, with the imminent completion of Marsa III and Siraj,rental growth here is expected to remain supressed. In addition,plots are now being offered to third party developers at MuscatHills, which is expected to boost the community feel of the area;however the additional supply is again likely to dampen prospectsfor strong rental value growth.

Residential investment activity remains robustThe sales market has continued to perform well, with Muscat’s ITCdevelopments attracting a mixture of buyers ranging from genuineend users to investors seeking to capitalise on the residential

yields of circa 6-7%. There also remains a group of buyers,particularly non-resident Indians from the UAE, who are acquiringone-bedroom retirement properties in order to benet fromthe accompanying renewable residency visas. At an institutionallevel, banks too are showing greater interest in acquiring buy-to-let assets in the capital’s ITCs. Bank Muscat, for instance, hasrecently completed a deal worth OMR 30 million to acquire 230apartments spread across four buildings at The Wave as part of itsplans to develop a OMR 75 million property portfolio.

Non-ITC off-plan schemes in high demandThe attraction of ITCs such as The Wave and Muscat Hills to potential

investors remains the capital gains potential, attractive residential yields and community lifestyle available. This is something thatemerging, or off plan ITC developments are unable to offer. At theSaraya Bandar Jissah development in south east Muscat, for instance,although contracts for the rst two residential phases have beenawarded during March, the transport and community infrastructureis still very much in its infancy. Once this is in place, the developmentwill begin to realise its full price potential.

Away from the ITC submarkets, other areas of the capital continue toattract a high level of investment from both Omani and GCC buyers.While GCC buyers dominate residential investment activity in thelocal submarkets, Omani nationals are the most active group overall.

The strong track record of investment demand for non ITCproperties appears to have resulted in banks being more amenableto both funding real estate development and offering more off-plan mortgage products. This may however be curtailed sharplyover the coming months should the low oil price environmentpersist and dampen economic growth as forecast.

For now however, off-plan properties outside designated ITCs continueto attract high levels of interest from GCC buyers. In Bausher forinstance, off-plan two-bedroom investment properties remain in highdemand, with yields in the region of 10% being the primary draw.

Developers continue to focus their attention on one- and two-bedroomapartments in the OMR 35,000-60,000 price bracket, which remain themost sought after.

Further aeld in Al Khoud, in west Muscat, we have recorded a stronglevel of buyer demand for 35 villa plots, which are available for OMR135 psm, underscoring the depth of demand in the off-plan non-ITCmarket, which is expected to persist.Source: OPEC

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For further information, please contactIan GladwinHead of [email protected]+968 24564250

Steve MorganCEO of Middle [email protected]+9714 365 7700

Philip PaulHead of [email protected]+968 2205 7900

Marianne HelmeResidential [email protected]+968 22057800

Faisal DurraniInternational research & business development [email protected]+44 207 647 7166

© Cluttons & Partners LLC 2015. This publication is thesole property of Cluttons & Partners LLC and must notbe copied, reproduced or transmitted in any form orby any means, either in whole or in part, without theprior written consent of Cluttons LLP. The informationcontained in this publication has been obtained fromsources generally regarded to be reliable. However, norepresentation is made or warranty given, in repect ofthe accuracy of this information. We would like to beinformed of any inaccuracies so that we may correctthem. Cluttons LLP does not accept any liability innegligence or otherwise for any loss or damage sufferedby any party resulting from reliance on this publication.

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Muscat Residential Market Outlook Spring 2015 0 (1)

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