Oman’s property sector rebounds in 2021, but values and rents remain depressed

The Sultanate of Oman’s real estate sector, billed as an important enabler of economic development, witnessed a strong recovery in 2021 following a period of “pandemic-induced sluggishness” during the previous year, according to a key market report.

Oman REIT, the country’s first publicly listed Real Estate Investment Trust Fund, noted in the Chairman’s Report for fiscal 2021 that the total value of traded property in the Sultanate of Oman grew 4.3 per cent to RO 2.56 billion last year, up from RO 2.46 billion in 2020. Oman REIT Fund Chairman Hilal bin Hamad al Hasani said the uptrend signalled the “sector’s resilience amid easing pandemic restrictions”.

At the same time, the number of real estate transactions jumped 27 per cent to 106K in 2021, up from 83K in 2020, the Chairman noted, citing figures released by the National Centre for Statistics and Information (NCSI).

Despite the healthy recovery in the sector, the value of trades still remains below pre-pandemic trends, the report pointed out. Against an average of RO 246 million worth of properties traded every month during the 12-month period preceding the onset of the pandemic, the average slumped to RO 189 million per month during the pandemic, representing a decline of 23 per cent. However, in 2021, the average value of property transactions rebounded to RO 229 million a month.

In trend with the sharp growth in property transactions, mortgage activity too has surged, according to Oman REIT’s Annual Report. The traded value of mortgage contracts totalled RO 1.34 billion, although below pre-pandemic levels. Still, the number of executed mortgage contracts climbed 21 per cent to 18,082 contracts in 2021, up from 14,868 a year earlier.

But property values and rents, most notably for the residential property sector, remained depressed despite the sharp rise in the volume of transactions. They remained well below the last peak witnessed in the second quarter of 2014, the report said.

“A combination of factors, including new stock additions in the last five years has contributed to this trend. The average value of mortgage transactions declined by 24 per cent year-on-year between 2020 and 2021,” the Chairman added.