While real estate transaction figures continue to reflect a more cautious macroeconomic environment, potential reforms could pave the way for Oman’s property market to regain some of its dynamism going forward, according to Oxford Business Group and Globe Server, a consulting firm based in Beijing.
The value of property traded in the Sultanate between January and June this year fell by 69.9 per cent year-on-year to RO 1.4 billion ($3.6 bn), according statistics released by the National Centre for Statistics and Information (NCSI).
Over the same period the traded value of mortgage contracts fell by 80.7 per cent to RO 797.7 million ($2.1 billion), while the number of sales contracts eased by 23.9 per cent to 30,635.
The figures are indicative of low market confidence at a time of ongoing macroeconomic uncertainty, as Oman continues to realign its economy to a lower oil price environment through fiscal adjustments and measures to promote diversification.
According to the IMF, the Sultanate’s GDP growth is expected to ease to 0.4 per cent this year, down from 3.1 per cent last year and 4.2 per cent in 2015.
The Sultanate’s sizeable youth population — more than half of residents are under the age of 25, as per NCSI figures — should continue to sustain demand for real estate, with a particular focus on apartments.
Indeed, property services firm Savills estimated that 75 per cent of apartment sales in central areas of the country such as Muscat were made to young citizens during the second half of 2015.
“Residential real estate will need to meet the housing demand for this emerging demographic group, which is likely to have an appetite for modern housing in the form of apartments,” Sudhakar Reddy, CEO of Al Habib and Co, said.
The country is also home to a large number of expatriates, which accounted for 45.1 per cent of the population as of last month, according to the NSCI.
Expansion of this demographic helped population growth average 8.5 per cent per year between 2011 and 2015, according to World Bank figures.
However, an economic slowdown has seen the expatriate mix change, with some skilled foreign workers electing to leave, and unskilled workers continuing to arrive.
This in turn has affected market dynamics, Reddy said, putting downward pressure on rents and increasing demand for more affordable housing. Awaiting Cabinet approval Legislative reforms to the laws surrounding real estate purchases are being considered to help the market adapt to Oman’s large non-native population.
Currently, foreign nationals from outside the GCC can only own land in six integrated tourism complexes (ITCs). In mid-March, however, the Ministry of Housing (MoH) proposed new rules that would allow foreign
nationals to own property outside ITCs. The proposals also omit eligibility restrictions based on the time a potential foreign buyer has spent in Oman, and would be implemented following discussion by the Majlis Ash’shura and approval from the Cabinet. “If the proposals are passed into law following Cabinet approval, they could boost real estate sales by allowing foreigners to absorb unused capacity, particularly for high- and mid-tier property,” Hisham Moussa, CEO of Alargan Towell, said.
Mohammed al Ghassani, deputy chairman of the Majlis Ash’shura, also gave his backing to the legislation at the Oman Real Estate Conference, which took place in Muscat in mid-May.
“Our economy will benefit greatly from this, and [it] will play a big role in developing the real estate sector.
By only allowing expatriates to purchase certain types of property, Oman is losing out on a huge opportunity that lies on its doorstep,” he had said.
Nonetheless, some market observers are wary of the new legislation, believing liberalisation would inflate property prices in the short to medium term, and make it more difficult for locals to buy land.
Another potential reform of significance for stakeholders in Oman’s real estate sector is the development of a real estate pricing
index, mooted for implementation this year. According to the Oman Real Estate Association it said would increase transparency by giving a clearer picture of current market prices and the transaction histories of properties.
— with ONA inputs
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