Oil price boost helps stabilise real estate market
Published: 02:11 PM,Nov 05,2022 | EDITED : 06:11 PM,Nov 05,2022
2156812
BUSINESS REPORTER
MUSCAT, NOV 5
Leading global real estate adviser Savills released its latest research analysing Oman’s real estate market performance. The report provides a comprehensive snapshot of the Sultanate’s macroeconomic environment whilst focusing on the residential and commercial real estate sectors.
Swapnil Pillai, Associate Director, Middle East Research, said, “Oman’s economy has recovered well from the effects of the Covid-19 pandemic and weak oil prices. The government’s financial position is much stronger now than it has been for several years, despite the pandemic, due to a prudent fiscal approach. Recent months have also witnessed an acceleration in government investment projects. Headwinds, however, remain for the real estate sector but there are some emerging signs of market stability.”
During 2020, the impacts of the Covid-19 pandemic accelerated the decline of the expatriate population that started in 2017 with around 230,000 expatriates leaving Oman over the course of the year. Last year saw expatriate numbers reduce further but in H1 2022, the expatriate population grow by approximately 10 per cent, driven almost exclusively by an influx of expatriate workers rather than professionals.
OFFICE RENTAL
Recent years have seen the introduction of a significant supply of new office space which has exceeded demand. Savills estimates that there is currently around 400,000 sqm of mid to higher grade office space for the rental market in Muscat with a further roughly 100,000 sqm of office space under construction, although much of this is lower to mid-end.
Due to tepid demand relative to supply, there has been downside pressure on occupancy with only a limited number of buildings currently achieving occupancy levels in excess of 70 per cent.
Realistically, achievable rental values dropped by 5 to 10 per cent over the course of 2021 and are currently 25 to 40 per cent lower than 2015 with the Shatti Al Qurum submarket showing the greatest resilience.
The notable recent upswing in oil prices, if sustained, is likely to have a positive impact on the commercial sector and could help to drive demand and occupancy.
Matthew Wright, Head of Consultancy at Savills Oman, said, “We expect market conditions to remain challenging over the remainder of 2022 in terms of both demand and achievable rental values but high oil prices, if sustained, are likely to provide a boost for commercial activity.”
Recent years have seen extensive development of residential units — particularly of low to moderate grade residential apartments with limited to no facilities — for the rental market across Muscat, which has resulted in a significant oversupply relative to diminished demand.
MUSCAT, NOV 5
Leading global real estate adviser Savills released its latest research analysing Oman’s real estate market performance. The report provides a comprehensive snapshot of the Sultanate’s macroeconomic environment whilst focusing on the residential and commercial real estate sectors.
Swapnil Pillai, Associate Director, Middle East Research, said, “Oman’s economy has recovered well from the effects of the Covid-19 pandemic and weak oil prices. The government’s financial position is much stronger now than it has been for several years, despite the pandemic, due to a prudent fiscal approach. Recent months have also witnessed an acceleration in government investment projects. Headwinds, however, remain for the real estate sector but there are some emerging signs of market stability.”
During 2020, the impacts of the Covid-19 pandemic accelerated the decline of the expatriate population that started in 2017 with around 230,000 expatriates leaving Oman over the course of the year. Last year saw expatriate numbers reduce further but in H1 2022, the expatriate population grow by approximately 10 per cent, driven almost exclusively by an influx of expatriate workers rather than professionals.
OFFICE RENTAL
Recent years have seen the introduction of a significant supply of new office space which has exceeded demand. Savills estimates that there is currently around 400,000 sqm of mid to higher grade office space for the rental market in Muscat with a further roughly 100,000 sqm of office space under construction, although much of this is lower to mid-end.
Due to tepid demand relative to supply, there has been downside pressure on occupancy with only a limited number of buildings currently achieving occupancy levels in excess of 70 per cent.
Realistically, achievable rental values dropped by 5 to 10 per cent over the course of 2021 and are currently 25 to 40 per cent lower than 2015 with the Shatti Al Qurum submarket showing the greatest resilience.
The notable recent upswing in oil prices, if sustained, is likely to have a positive impact on the commercial sector and could help to drive demand and occupancy.
Matthew Wright, Head of Consultancy at Savills Oman, said, “We expect market conditions to remain challenging over the remainder of 2022 in terms of both demand and achievable rental values but high oil prices, if sustained, are likely to provide a boost for commercial activity.”
Recent years have seen extensive development of residential units — particularly of low to moderate grade residential apartments with limited to no facilities — for the rental market across Muscat, which has resulted in a significant oversupply relative to diminished demand.