After peaking in 2008, property prices in Oman saw a sharp contraction in line with the regional economic slowdown
Residential rental prices in Oman have yet to fully recover from the slump of 2008, but they have been rising across the market for the past two years a trend that is expected to continue.
Since 2006, non-GCC nationals have been able to buy freehold property in Oman, but only in designated integrated tourism complexes (ITCs), such as The Wave, Muscat and Muscat Hills Golf & Country Club. Owners can get a residency permit for themselves and their immediate family. This may be an attractive option for those planning to stay in Oman for a long time, but demand is outstripping supply in the ITCs and prices are high and rising.
By contrast, the office market is oversupplied and the cost of commercial premises is lower than in most other Gulf cities, although access to parking can be a problem.
Demand from both locals and expatriates is driving up prices in the ITCs. According to property consultancy Savills, sale prices have risen as much as 25 per cent in the past year, with a two-bedroom apartment at Muscat Hills or The Wave now costing RO120,000-150,000 ($310,000-390,000), rising to RO325,000-400,000 for a four-bed villa and RO375,000-650,000 for a five-bed villa.
Most expatriates, however, rent their accommodation. The cost of good-quality properties in central areas of Muscat range from RO375 a month for a two-bed apartment to RO950 for a three-bed townhouse and RO1,550 or more for a five-bed villa. High-quality new developments tend to be fully leased within weeks of coming to the market. Well-established central areas include Qurum, Shatti al-Qurum, Madinat Sultan Qaboos and Azaiba.
|ITC sales prices*|
|The Wave||Muscat Hills|
|*=In RO thousands; ITC=Integrated Tourism Complex. Source: Cluttons; Savills|
Rental prices in the ITCs are generally higher and the gap is expected to widen in the years ahead. Current rental prices in Muscat Hills and The Wave are RO750-800 a month for a two-bed apartment, rising to RO1,400-1,600 for a four-bed villa and RO1,750-1,900 for a five-bed villa.
There are reports that some employers have been cutting their housing allowance for new expatriate arrivals, so it may be wise to confirm what allowances you will be paid and compare them against current market rates before committing to a move. In addition, landlords generally demand substantial advance rent payments, ranging from quarterly cheques for mid-tier properties to half-yearly or annual payments at the top end of the market.
Office space in Muscat is considerably cheaper than in other major Gulf cities. In May 2013, real estate consultancy Jones Lang LaSalle reported that the average rental price for office space in the Omani capital was about $250 a square metre (sq m). In comparison, the equivalent price for Doha was $830, while in Riyadh it was $515 and in Abu Dhabi it was $470.
A big reason for this is the oversupply in the market, with a vacancy rate running at 25-30 per cent in early 2013. However, prices are thought to be bottoming out.
|City||Vacancy rate (%)||Cost ($/sq m/year)|
|Other Gulf cities:|
|sq m=Square metres. Source: Jones Lang LaSalle|
Businesses have been showing a preference for locations away from the historic central business district of Ruwi and, instead, are moving west towards the airport and beyond. Rental costs for high-quality buildings in prime locations vary from about RO6 a sq m a month in Al-Khuwayr to RO7 a sq m in the Azaiba and Ghubra districts and RO8 a sq m in Shatti al-Qurum. In all cases, these are substantially less than the prices being charged when the market was at its peak in 2008.
A lack of car parking spaces or professional management and maintenance can be an issue for some buildings, even recently completed ones. The authorities in Muscat have been trying to clamp down on businesses using residential property as office space by turning down new licence applications to use villas as commercial premises.
Oman has long had a reputation for focusing on high-end luxury hotels, although more mid-range options are being developed.
Many of the major global and regional chains have a presence in Muscat, including Best Western, Crowne Plaza, Golden Tulip, Grand Hyatt, Ibis, Intercontinental, Radisson Blu, Ramada and Ritz Carlton. Outside the capital, major hotels include Crowne Plaza, Hilton and Marriott in Salalah, and Crowne Plaza and Sohar Beach Hotel in Sohar.
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