Jobs boom boosts Muscat residential market
Muscat, June 16, 2014
Increased demand in both the residential sales and lettings markets across Muscat has been underpinned by an increased level of job creation, with both buyers and tenants focussing their attention on higher quality schemes, said a report.
The tenant demand has improved in line with increased job creation, which has been in part driven by the government’s heavy investment in transportation and energy infrastructure upgrades, according to top real estate consultants, Cluttons.
In the rental market, where attention is centred on schemes perceived to offer better quality accommodation, two-bedroom apartments and four-bedroom villas remain the most sought after across Muscat, the expert stated in its "Muscat Spring 2014 Residential Market Outlook Report."
In addition, the strong demand for larger villas in particular, coupled with limited new supply, has helped to drive up rents during the first quarter of 2014.
The monthly rents for four-bedroom villas have risen across most submarkets, with Azaiba (9 per cent) showing the strongest growth this quarter. On the other hand, rents for two bedroom apartments have remained largely stable over the same period, it added.
Philip Paul, the head of Cluttons, Oman said: "With an increased emphasis on quality, The Wave and Muscat Hills are two developments that are currently enjoying a resurgence in demand, with The Wave recently bringing forward the release of its Reehan Residences to satisfy investor appetite."
"At the same time, the rising levels of inventory here will help to address some of the pent up tenant demand for The Wave," he remarked.
According to Cluttons, the increased interest in higher quality properties is set to lead to a widening gap between prime and secondary locations throughout the city in the near term.
Their report asserts that the sales market is showing a significant increase in demand for completed residential properties.
At The Wave and Muscat Hills, which are Integrated Tourism Complexes (ITC), prices average RO1,000 ($2589) per sq m. Some Omani investors are being attracted to the ITC properties due to the attractive rental yields, while others are driven by the desire to transition to home ownership, the property expert said.
A degree of pent up demand from Omani nationals, which is being driven by a gradual build-up of home ownership aspirations since the ‘great’ recession, has resulted in many households now opting to step on to the property ladder, buoyed by rising market confidence levels, it stated.
"On the supply front, we feel the market has room to absorb further residential schemes and prices are, to a large extent, currently being supported by the dearth of stock," observed Paul.
"With no substantive new ITC schemes likely to be delivered over the next six months, we expect capital values to continue edging upwards over the course of the year. That said, developers are mobilising on sites such as Saraya as they move to capitalise on the strengthening appetite to purchase," he added.
According to Cluttons, the foreign investment into Oman’s residential property market has also risen in the past year, in particular from UAE-based non-resident Indian (NRI) buyers.
With Oman’s long and close history to the Indian subcontinent, NRI buyers are increasingly attracted to Omani cities such as Muscat, which offers excellent air and road links to nearby Dubai.
In addition, there is the added benefit of a residential visa linked to property ownership. This is something other regional locations are unable to offer, or guarantee, the report stated.
Steve Morgan, the CEO of Cluttons (Middle East) said: "We have recorded an upturn in the number of NRI buyers from the emirates entering the market over the past six months. With prices rebounding in Dubai, an affordability threshold may have been breached and with regulations surrounding retirement properties not entirely clear, it would be logical sense for this group to look at nearby markets such as Muscat."
"While this trend is yet to remove substantive quantities of stock from the market, the propensity for the creation of several “buy-to-leave” homes, as the limited supply is further depleted, will no doubt place further upward pressure on capital values," he added.-TradeArabia News Service