After five consecutive quarters of stability in the residential lettings market, rents across Muscat, Oman, dipped slightly during the third quarter, said a report.

However the volume of tenant requirements has continued to hold steady, with demand remaining centred on what are perceived to be high quality, well managed properties, stated international real estate consultancy Cluttons in its latest report.

The report highlights that the focus on higher quality schemes is demonstrated by the fact that vacancy rates in Muscat’s two main ITCs – Al Mouj and Muscat Hills – remain exceptionally low due to their appealing modern amenities.

Philip Paul, Cluttons’ country head of Oman, said: "While average rents may be dipping across some parts of the city we are seeing an encouraging emphasis on quality, with steady tenant demand for buildings which are well managed and maintained to a high standard."

According to Cluttons, the primary driver behind the slide in rents in some areas has been the sharp supply upturn in what is considered to be lower quality stock which is undermining rents across several submarkets.

"High quality schemes have seen rental values holding steady, with some even creeping upwards slightly. The Saud Bahwan complex is as an example of a development that remains fully let, with a long waiting list, underpinned by more affordable monthly rents, which range from RO550 to RO625 ($1,424 to $1618) for two-bedroom apartments," observed Paul.

"We anticipate similar high interest in the Public Authority for Social Housing’s Al Taminat residential scheme in Bausher, which is due to complete later this year," he added.

Faisal Durrani, the head of research at Cluttons, said: "Although prevalent across the rest of the GCC, gated community living is still a relatively new concept to Oman, but the depth of demand from tenants, both expats and increasingly the younger Omani generation seeking out gated living in rising numbers, continues to remain strong."

Cluttons pointed out that the property market as a whole was being supported by the relative stability in job creation levels in the Sultanate as it continues to boost oil production to inject confidence into the economy, which has also been bolstered by the government’s infrastructure upgrade programme.

"Despite the global slowdown, economic growth is expected to continue , albeit at a slower pace than 2014. Residential rents should remain fairly stable over the next six months, with poorer quality pockets of stock underperforming. This course assumes the absence of any major global economic or oil price shocks over four forecasting horizon," he added.

The sales market on the whole continues to remain very active with developers keen to capitalise on demand by bringing new schemes to market.

According to Cluttons, anecdotal evidence suggests that mortgage lending continues to tick upwards with demand coming from GCC nationals and Omani buyers.

"We are seeing rising numbers of buyers from the wider region such as those from Syria, Iran and Iraq who are securing homes in the Sultanate, drawn in by the prospect of permanent residency and the allure of a relatively small and stable residential market," said Paul.

"Typical budgets from this pool of buyers range from RO130,000 to RO150,000 ($336,587 to $388,370). While supply levels are continuing to edge upwards, demand is remaining fairly constant and we will be monitoring price changes closely. For now, it is our view that the rate of capital value rises is likely to slow between now and the spring," he added.-TradeArabia News Service