No major gains in revenues amid property boom

Muscat, April 1 – Even as more property developments are coming up across the capital, civic authorities and landlords are at the losers’ end.
This means revenues to Muscat Municipality from tax and fees are not in proportion to the number of properties available in the market and owners are not getting the required amount as rents.
Even pristine villas and flats in prime locations are stuck with ‘for rent’ signboards in the absence of adequate number of tenants.
According to real estate business owners, despite a boom in the availability of new properties, thousands are lying empty and hardly any new lease agreement is signed.
A civic official admitted that there has not been any significant rise in the registration fee either through renewal or new lease agreements.
“No denying the fact that there has been slump in the rental market. This is evident from the graph showing fee and tax collection,” said the official.
He revealed that the present loss is in addition to the tax evasion by several property owners in connivance with the tenants by not registering the lease agreements with the civic body.
“This is being done to escape the five-per cent tax payable to the municipality,” he said.
The municipality tax that has been mentioned in the provisions of the Royal Decree No 6/98 and its amendments is a governmental debt that has to be paid by landlords or tenants as per the agreement and can be collected by the administrative confiscation.
If the landlords are losing on rental income due to vacancy losses, the municipality is hit with non-receipt of lease agreement fee running into thousands of rials, the official said.
Building owners and contractors admit that there has been at least 20 per cent fall in the property rental market in the recent past.
“This means the tax payment is comparatively less than that of the previous years,” said Mubarak al Wahaibi, a building contractor in Ruwi.
A flood of new properties coming into the market and departure of expatriates have been identified as reasons for the rental drop.
“The situation has changed now. The availability of flats and villas has increased manifold with the supply outstripping demand. Residents are looking at how they can minimise their expenses,” he said.
Meanwhile, reports indicate that Oman real estate market is expected to see a recovery from the recent decline from the current year onwards.
The calculation is based on an anticipated rise in Oman’s GDP by 5.2 per cent — the strongest rate of expansion since 2015.
“As the country continues to embark on a challenging roadmap to wean itself off its dependence on oil revenues through diversification efforts and positive government intervention, the real estate market has been impacted by a reduction in overall demand,” points out the report ‘Property Market Focus 2017-18’.
The rental market undoubtedly remains firmly in favour of tenants.
Weaker demand has resulted in the reduction or eradication of waiting lists for key residential buildings in the city, adds the report.