MUSCAT - The last two years have been challenging for Oman’s economy, which is still working its way through an exacting period. The burden of that downward spiral of the economy was considerably felt by the real estate market, resulting in a reduction in overall demand.

However, the year 2018 has begun on a positive note and property consultants in the country also forecast a stabilised if not robust market through the year.

The National Centre for Statistics and Information (NCSI) data for the first quarter of 2018 showed a robust growth compared to last year. Rise in oil prices and the recovery in economic activity have impacted the real estate market as well.

As an indication of the market trend, the total value of property transactions in the January-March period this year increased by 6.8 per cent to RO776.3mn, from RO726.8mn in the same period of last year, according to NCSI.

Buoyed by Oxford Economics’ estimate that GDP growth is expected to surge by 5.2 per cent in 2018; the strongest rate of expansion since 2015, acceleration of further economic growth is forecast to be fuelled to a significant degree by the introduction of natural gas production from the Khazzan gas field as well opening of the new Muscat International Airport, according to Cluttons Muscat Winter 2017-18 Property Market Outlook.

Ian Gladwin, head of Cluttons Oman, said, “Although the real estate market has been impacted by a reduction in overall demand, there remain pockets of activity and clear opportunities in both the residential and commercial sectors.”

M Sudhakar Reddy, CEO, Al Habib & Co, which is the largest real estate products and services company in Oman, said that 2018 will see things change. “We are expecting 2018 to be a much better year than 2017 as consumer confidence is returning to the market. Now people have begun spending again and are ready to invest also. Things are improving. “The government has been prudently managing its finances by borrowing when oil prices are low and building reserves when oil prices are high. The government has managed the sharp drop in oil prices very well and since oil prices have improved we can expect a better year ahead.”

A steep correction in rentals has taken place in some areas in the last couple of years. Would the trend continue in 2018? Reddy replied, “In prime areas such as Qurm, Ghubra and Al Khuwayr there is no scope for reduction in rentals rather these areas could witness increase in rentals. There is a likelihood of rentals stabilising in outlying areas of Muscat such as Ma’abela, Amerat and Al Khoudh.”

He added that despite the fact that many offices from CBD and MBD areas have shifted to other locations, areas such as CBD and Ruwi are still very popular among expatriates. “Rents haven’t dropped here much compared to Amerat and Ma’abela. Rents have fallen in the outlying areas but the main reason is not depressed economic sentiments, rather it is higher supply compared to weaker demand. I see a decline in rentals but there could be some stabilising of rents in these areas. If you travel to these locations, you can see much construction taking places as planning and construction of these started a couple of years ago, and they are entering the market now.”

Another major positive for real estate sector has been the decision from the Capital Market Authority recently for establishing real estate investment trust (REIT) funds in Oman. “This is a very good development for the real estate sector in Oman. It is one of the things that was discussed and promised during Tanfeedh. It will throw tremendous opportunity for people like us and also for smaller investors. REIT would basically be a fund dedicated for investment in the real estate sector and in which small investors can also take part,” said Reddy.

According to the Cluttons report, development of Duqm as an industrial port city has tremendous potential and continues to gather pace. The port is already operational with Phase 1 expected to be fully completed in 2019. In addition, the South Korean government has recently announced plans to assist with developing Duqm into a ‘smart city’.

Ten sub-usufruct agreements have now been signed between Oman Wanfang and Chinese companies for projects worth a total of US$3.2bn within the 11.7sq km China-Oman Industrial Park, the report stated.

Oman is also working to reduce the country’s reliance on oil and diversify the economy, for which the government has opened the real estate sector to investment from expatriates in Integrated Tourism Complexes (ITC). The ITCs are freehold mixed-use developments featuring different asset classes including residential, hospitality, retail, leisure and offices.

The government is developing more than 5,000 homes in collaboration with private developers in five ITC projects namely, Diyar Ras al Hadd Resort, Omagine Project, Quriyat Integrated Project, Naseem al Sabaah Project and Al Nakheel Project. Apart from that a few big malls under construction, like Mall of Oman, Mall of Muscat, Al Araimi Boulevard are sure to provide a lift to the sagging mood in the real estate industry

 Source: https://www.muscatdaily.com/Archive/Business/Real-estate-emerges-from-lacklustre-2017-with-accelerated-growth-5a4j