A steady decline in the rental market in Oman. Rents declined by 10-15% in 2018 compared to 2017. Since the demand is mainly from the expatriates who are decreased in numbers in the last years, their declining number is resulting in stress in the rental as well investment properties, according to the March 2019 Property Report from Al Habib, the largest real estate solutions provider in Oman.
Owners who have been quick to adjust the asking rents downwards, and who offer good maintenance services, are enjoying higher occupancies than those who are less flexible on rents and who do not maintain their buildings well, stated the report.
Location is also a key factor, with property rents and occupancies in popular locations, declining less than those in other areas. The declines are less in popular locations like CBD, Qurm, Al Khuwayr and Ghubra while higher in Wadi Kabir, Ghala, Amerat and the areas beyond the airport.
According to the company, the demand for real estate is driven by the job market. The total number of expat employees has gone down from a peak of 1,854,880 as on December 31, 2017, to 1,787,447 as on December 31, 2018, a decrease of 67,433 (3.64%).
In most cases, enquiries are not from the newly arriving expatriates but from those already in Oman, seeking to move to cheaper or better accommodation. This has resulted in declining rents as well as occupancy and rental incomes taking a double hit.
Villas are mostly for self-occupation and one would expect demand to be steady with rising employment of Omanis. However, the figures indicate there is a slackening of demand here too. The latest statistics show that the number of residential building permits, in all of Oman, has declined to 24,149 in 2017 from 31,912 in 2016 and 34,925 in 2015. Surprisingly the drop is steep (more than 50%) in Muscat and Dhofar and less in the smaller governorates.
With three malls, that are expected to host about 700 outlets, coming up in Muscat in the next couple of years, and with a number of malls opening in Salalah, Sohar, Nizwa and Sur in the last couple of years, the retail sales are stagnating.