The real estate market in the
country is returning to normalcy with a generous demand for both
commercial and rental properties, thanks to the consistent
economic growth witnessed by Oman despite the slowdown of the
past two years
When The volatile period of the past two years has eased for the
real estate sector and stability now has returned with an
increased supply as well as demand for the entire spectrum of
properties – from high end to low end.On the demand and supply
side, the demand for apartments and supply are evenly matched.
But there is an excess supply of villas. Construction costs and
land prices have come down therefore housing is much more
affordable now than in 2008. But there is nothing like a
breakthrough, which will make house prices very cheap.
According to the Ministry of National Economy’s monthly
statistical bulletin, the price index for rents confirmed a 16
per cent increase in January of 2009, compared to the same month
the previous year. Meanwhile, a slight challenge still exists in
commercial propert spaces in the medium range. The rents of
commercial spaces are much lower than what existed in the peak
of 2008. Given land price and construction costs, prevailing
rents give reasonable returns to the developer as well.
Figures released by the ministry of housing, in the first
quarter of the year indicate that there is a 62 per cent rise in
sale value of property and 11 per cent rise in the sale volumes
compared to corresponding period last year.
The property prices peaked in 2008 and moderately dropped since
then. The phase of price correction that the market had
experienced through 2009 is over. Market experts have predicted
that rental prices may not go down any further but instead the
market is expected to move forward.
Vacancy rates in rented houses have decreased significantly
since 2003, despite an influx of new units. Before the so-called
real estate bubble, apartments that were rented out at RO250,
reached RO600, today the prices have come down and became stable
at RO450 after correction. Although the prices are now
stabilising, they still remain high.
Comparing the current rents with that of 2008, rents have come
down. But between 2009 and 2010 10 there isn’t much difference.
Between 2008 and 2009 there was a drop of 15- 20 per cent in
rents of apartments. The government expenditure in the
infrastructure development for ports, airports and roads is
giving a boost to the economy. Consequently, there is going to
be more liquidity in the money market and the standards of
living are expected to go up. This will see more spendings and a
resultant growth across the economy. Such growth will definitely
be witnessed in the real estate sector as well.
In 2009, banks and investors were unwilling to provide funds to
the sector but 2010 has witnessed a change in attitude. Both
banks and investors are willing to lend at present. While many
speculators were active in the real estate market earlier, the
people who buy property now are real investors. They are the
people who actually buy properties that they now want to live
For a reliable client, funding is not an issue but banks no
longer fund speculative activates and they would like to see
tangible results from a project. Some market observers feel that
the issue facing Muscat is that of an oversupply of properties.
There has been a lot of building activity in terms of office
space supply, which might be absorbed at a low rate. People are
still looking at developments but they are more realistic about
their feasibility studies.
People are much more aware now than they were three years ago.
If you are looking for a quick short-term profit from
investments in property market, then it is high risk. But
people, who look at long-term investments, will be successful.
The crash of the real estate sector in the turmoil of global
financial crisis has given a new urgency to affordable housing.
Oman’s beachfront and cityscape are dotted with high-end
luxurious properties that are much talked about. Ongoing
projects in the housing sector, especially in the affordable
housing sector are progressing fast and serious buyers are
active in the market. Real estate agents are getting enquires.
But for Omanis, who belong to the middle rung of the society,
this expensive housing, which is currently available in the
market, is not affordable. Therefore, affordable housing is the
need of the hour.
One of them is the growing young population of Oman, which is
also becoming affluent. A whopping 60 per cent of Oman’s
population is below the age of 30 with the average salary earned
being RO600. It is this segment that wants to create their own
set-up and want to invest and buy property such as those
available on affordable investment schemes. It is estimated that
by 2025, the country’s population will swell to 5 million from
the current 3.3 million.
In the absence of official price statistics for the real estate
sector, both rental and sale prices are estimated to have
doubled over the past four years. It is a fact that many Omanis
are finding it hard to keep up with rising housing costs. There
is a speculation that rents will further go up in 2011 for new
properties. The government has done its bit to ensure that
Omanis in the middle to low income brackets do not get priced
out of the housing market.
To limit the impact of the high prices, in June 2008, an
amendment in the 2007 housing law limited the cap on rental
price increase to 7 per cent per annum for three years,
subsequent to the signing of a lease agreement. Under the
previous cap, landlords could increase rent up to 15 per cent
over two years. This may have a bearing on how flats are taken
Many Omanis who work in Muscat currently take flats on rent but
are interested in paying an equated monthly (mortgage)
installment that is equal to monthly (rental) rates in order to
finance a property purchase. The average income of this
particular segment rests between RO700 and RO900, though that
may not be the full picture of his income. His earnings may also
come from other sources like stock market, financial support
from family, land, shops and rents.
In the absence of personal tax, it is difficult to assess
people’s income. There is a potential demand for affordable
housing, which will continue growing as Oman’s large youth
population moves away from joint families to the system of
nuclear families. However, in the absence of a proper survey,
demand cannot be quantified. Oman’s biggest advantage is that it
has sprawling land, prices for which had dropped dramatically at
one point of time. Location wise, there are two segments of
markets, based on personal preferences. There is demand for
houses in Muscat city; a sound infrastructure and a happening
city life being the reason behind such demand.
The government of Oman is spending a huge amount of money on
infrastructure projects like the Southern Express highway and
Batinah Coast Highway. Muscat International airport expansion is
going on. In short, Muscat is getting connected to the outskirts
of the city and there are buyers, who by choice, would like to
be located there for comfort and a bigger house, away from the
hustle and bustle of city life.
Popularising the segment
According to the statistics from MONE, the wholesale price
index, for building materials in Muscat fell to 163.2. The index
has plummeted further as the cost of steel, cement and other
materials remain low due to decreased worldwide demand stemming
from the global meltdown. This dip in construction and materials
costs has spurred developers to deliver more units to the
expanding middle-income market. Their high price was once a
prohibitive factor in building affordable housing. But with the
situation easing out, developers are now looking to increase
their presence in the sustainably affordable housing sector or
on reasonably priced properties.
However, Omanis have not yet reconciled to the fact that they
can own and live in apartments as most of the people perceive
them as smaller and closed space. The general preference is for
more open space as in villas. Developers need to raise awareness
among buyers to invest in this kind of property. Generally, an
affordable property hovers between RO50,000 and RO70,000. Muscat
is becoming a much denser city, which is making affordable
housing increasingly important. Certain areas are zoned and
rezoned for allowing the higher density development, based on
the infrastructure provided around them.
Companies like Alargan Towell Investment, Zain Property
Development and a few others are moving in to take advantage of
The supply-demand imbalance remains a key driver of the
continued negative outlook for the property industry in the
Arabian Gulf, says Moody’s Investors Service in a new Industry
Outlook report. The negative outlook reflects the rating
agency’s view of fundamental credit conditions in the industry
over the next 12-18 months.
“The supply-demand imbalance in commercial property and to some
degree in residential units, depending on the city or country,
is likely to grow worse as vast supply meets slack demand and is
a major driver of our negative outlook,” says Martin Kohlhase, a
Moody’s Assistant Vice President – Analyst and author of the
report. In the report, Moody’s notes that the other drivers of
the outlook remain the same as in 2009, namely funding and the
preservation of cash, which includes potential disposals of
non-core assets, cash collection and debt standstill agreements.
Moody’s believes that these factors will remain in place for the
rest of 2010, albeit with a different emphasis from the previous
The rating agency further notes that it has downgraded the
ratings of all GCC issuers with real estate exposure over the
past 12 months. The average rating of A2 at the beginning of
April 2009 now stands at Ba1, a five-notch drop. This is largely
a reflection of lower government support assumptions that had
underpinned a number of ratings.
However, although Moody’s industry outlook for the region as a
whole is negative, it notes that significant differences
continue to exist across the region, with Saudi Arabia seen as
the brightest spot of the six Gulf Co-operation Council (GCC)
countries. “The large, growing and young population of this
Kingdom continues to support the local residential market,”
explains Kohlhase. “Furthermore, rent and sale prices have
remained stable in prime areas, while limited price correction
has been witnessed on the outskirts.”
The rating agency says that several factors could prompt a
revision of the outlook to stable, including government spending
for public infrastructure work; government intervention; a
shortage of low- and middle-income housing and international
expansion. “However, we do not envisage moving to a stable
outlook in the near term,” Kohlhase cautions.
One of the biggest countries in the Middle East, the Sultanate
holds tremendous potential in terms of trade, industrial growth
and of course, real estate. As a result of a long maritime
history and interaction with various cultures, Oman can
rightfully claim that it is the friendliest country in the Gulf
basin. Today, Oman is one of the fastest growing economies in
the Gulf, thanks to prudent government planning, responsible
expenditure as well as heavy investment in the non-oil sector.
Unlike other countries in the Middle East, Oman boasts lush
green terrain in certain areas that spell out the promise of a
relatively calm and unhurried lifestyle. This country is home to
vast agricultural farms that are a vital source of fruits and
vegetables to the rest of the GCC. With extensive geographic and
climatic diversity, fertile coastal zones and mountains, Oman
has the most versatile terrain in the Gulf. As the country is
poised to develop further, the local real estate sector is going
through an exciting phase.
Oman is attracting foreign investors, not only from the GCC and
Asia but also from distant Europe, due to the low cost of its
land, high economic growth potential, easy availability of
beachfront plots and good infrastructure. Of late, Oman has been
investing heavily in its tourism, infrastructure, specifically
in its airline, roads and airports. Foreign participation in the
tourism industry has also been increasing due to government
incentives to investors.
Over the last five to ten years tourism in Oman has taken off in
a big way, with remarkable growth being experienced recently.
There has been an increase in direct, non-stop flights from key
international markets which have identified the potential of
Oman as both a tourist and business destination. This boom in
the tourism sector is reflected in the real estate industry as
Advantages of property Investment in Oman
Oman has zero taxation
Rental market in tipped in favor of landlord
Strong economic growth of the country
Exceptional performance of tourism sector
Freehold property ownership
The government is drafting a law to attract foreign investments
and is on a liberalisation drive to expand the markets. Many
multinational companies have taken advantage of the situation
and established bases in Oman, especially in Muscat. This has
boosted rents and consequently the rental yields.
& Partners LLC – Oman
Comprehensive service provider
International was formed over a century ago and has evolved
into one of the most respected and successful real estate
consulting groups in the UK.
The company has a network of offices in major cities in
England and Europe and a rapidly expanding international
network. The Group is renowned for its excellent track
record in the marketing of exclusive and prime residential
Owned and operated as a subsidiary of Emaar Properties, one
of the world’s largest real estate companies, Hamptons
continues to expand both locally and internationally,
positioning itself as one of the most valuable residential
property groups in the world.
Hamptons International established in Muscat in early 2000
as a first phase in its Gulf network presence and brings to
the region a full range of residential, commercial and
related professional real estate services in partnership
with HE Abdul Alim Mustahil Al Rakhyoot.
Hamptons International is a leading firm of real estate
consultants with its headquarters in London, UK and Dubai.
The company is represented in over 85 offices globally.
Hamptons is on the surveying and valuers panel of numerous
banks in the GCC region and in the Sultanate particular
emphasis on Bank Muscat, Bank Sohar, HSBC, Oman
International Bank, National Bank of Oman, Ahli Bank, Oman
Development Bank and Oman Arab Bank.
Some of the services provided under the Hamptons
International umbrella in the Sultanate of Oman are as
Research & Feasibility Studies
The company’s management strives to achieve excellence in
all property related services and assist existing as well as
new clientele with its unparalleled knowledge and experience
in the field.
First Choice LLC
Your best choice
Choice LLC is an ‘A’ Grade real estate company with over 400
employees and was founded in 2000 under the able leadership
of Muneer Ahmed Sulaiman, managing director, a pioneering
and a visionary entrepreneur.
Today, it is a specialised group, well known and reputed
having offices in Sohar, Dubai, Kuwait and Bulgaria.
Over the years, the company has fast blossomed with a
stunning 100 per cent growth achieved over the previous two
years. It is now preparing for a quantum leap in turnover
and profitability with it’s dedicated team
of professional management and skilled workforce.
The mission of the company is to contribute significantly to
Oman’s construction industry and become the country’s most
valuable builders and real estate company that is founded on
deep mutual trust, confidence and quality par excellence.
The operations of First Choice today can be categorised in
the following areas headed by their respective Divisional
Heads under the esteemed leadership of Muneer Ahmed Sulaiman,
Property Valuation and Appraisals Division
Real Estate Division: Buying and Selling Properties &
Civil Construction & Contracts Division
Property Management & Rental Division
Cast Aluminium Products Division: Decorative gates (manual
and remote controlled system); staircases, grills,
balustrades, window frames and fencing. (All these products
are manufactured under one roof at its Mabelah factory)
First Choice vision is to be the market leader and a trusted
name in every field of business it represents. To achieve
this vision, First Choice dedicates itself to uncompromising
business commitments, love and respect to every patron of
Siraj Real Estate
On a growth trajectory
Siraj Real Estate
is fast becoming a leading player in real estate investment,
brokerage and real estate services in the Sultanate with
extensive regional presence. As a real estate company
equipped with competitive professional knowledge and
experience, Siraj offers smart, progressive and innovative
solutions and efficient expertise and advice.
Siraj is a shareholder in Dar Althwabt, a Riyadh-based real
estate company, enabling Siraj to provide a wide range of
real estate quality services including property sales, land
sales, property investment, arranging tenancy for clients
property and marketing and resale of clients property.
Siraj always adheres to the philosophy of creating a high
value culture that delivers clever solutions. Siraj gives
top priority to employing qualified manpower, utilising
advanced technologies and adopting the best work techniques.
Besides, in order to achieve its visions and objectives, the
company has developed extensive cooperation with leading
local and regional partners. Strategic investors from Kuwait
have been part of the company for the past four years. The
company’s strategy of focusing on prime locations has also
helped it consolidate its growth despite challenging market
environment. Clients and their aspirations have always been
Though Siraj is clearly focused on achieving commercial
success, it has successfully incorporated to its business
ethical values and respect for people and accorded greater
importance to the conservation of nature and the development
of indigenous talent.
Exploring new horizons
Taif Properties is
one of the most prominent sales and leasing agents in Oman,
headed by a long-time resident with an abundance of local
knowledge and a deep understanding of the Omani culture.
Established in 2006, Taif Properties believes successful
long term partnerships are a crucial factor to the continued
success in the property market. The successful track record
for delivery and careful selection of opportunities has been
of fundamental importance in building long term
relationships with a number of international investors and
In the beginning the focus was on sales and new developments
in Muscat and Salalah which brought many new opportunities
for the company not the least of which was teaming up with a
well known mega developer from Qatar. This led to new
development projects in the countryside beyond Muscat and
the beautiful, Indian Ocean town of Salalah.
Taif is now a prominent force to be reckoned with in both
sales and leasing and particularly specialises in new
expatriates coming to Oman guiding them through the process
of finding a new home. Giving advice on schools,
neighbourhoods, banks, shopping and anything a new family
needs to know is all part of the service which is much
appreciated by the new arrivals.
Taif Properties offices are located in the business
and diplomatic district of Shatti Al Qurm, close to A’Sarooj.