Oman Property Market Gets Boost by Job Creation
According to international real estate consultant, Cluttons, strong economic activity in Oman, underpinned by the government's heavy inward investment, has continued to drive job creation across the Sultanate.
According to Cluttons Muscat Winter 2014 Residential Market Outlook report, jobs growth has directly boosted tenant demand with a rise in the number of new starters from the hydrocarbon and construction sectors being recorded. Demand continues to be centered primarily on the higher end of the market. Villas in particular remain highly sought after and the surging demand is expected to continue outstripping supply over the short to medium term, encouraging further strong rental value growth.
The steady influx of expat families to the Omani capital has resulted in rising levels of tenant requirements and the demand for gated communities, particularly for three bedroom villas, has risen in tandem. The resultant impact has been a 4.8% rise in rents since Q3 2014. Significant change has also been recorded for 4 bedroom villas, with monthly rents rising by 7% to OMR 1,610, over the same period.
The report shows that rental value growth for two and three bedroom apartments during the first three quarters of 2014, have followed a path of stabilization, with Q3 experiencing almost no change in average rents, following a 0.7% rise in Q2. The mute growth in Q3 was exacerbated by the traditional summer slowdown and the onset of Ramadan.
According to Philip Paul, head of Cluttons in Oman says, "Rising levels of demand has led to a number of developers rushing to deliver new residential stock to the market, as they move to capitalize on the depth of requirements. The majority of planned supply is expected to be at the middle to lower end of the quality spectrum, and demand is likely to be limited for such schemes, with take up expected to be driven by the amenities available, the quality of the finishing and pricing, in that order of importance."
In the residential sales market, the purchase of retirement homes in Oman, among non-resident Indians continues to gather pace due to the relative affordability in comparison to other Gulf cities like Dubai. Integrated Tourism Complex (ITC) development, The Wave, is amongst the most sought after, with both the 5 star Kempinski Hotel and 4 star Wave Village Plaza Hotel, set to bolster interest at the scheme, once the hotels are completed in 2015 and 2017 respectively.
Paul further added, "With two more hotels being planned at The Wave and a real community feel now beginning to emerge as retailers move into the recently completed Al Marsa Village Retail Centre, we expect to see further upward pressure on capital value growth rates, as the development becomes an increasingly desirable place to live."
The report also points to growing popularity at another ITC development, Muscat Hills, in both the rental and sales markets. With two bedroom homes offering partial golf course views priced at OMR 115,000, the development is considered to offer better value for money for the time being, in comparison to similar developments, according to Cluttons.
Paul concluded, "Taking into consideration the soon to open French curriculum school, and development of further facilities and services at Muscat Hills, capital values are expected to resemble those of The Wave, with an increasing number of families expected to target the scheme."