MUSCAT: Residential and commercial rents in the Sultanate continued to fall due to a combination of factors including the impact from COVID-19 pandemic, drop in expat population and low oil prices.
“Expatriates play a significant role in influencing demand for real estate. Market conditions in both the residential and office space rental sectors in Muscat were already in slowdown or recession prior to the COVID-19 pandemic as a result of slow economic growth and negligible net population growth,”Ihsan Kharouf, head of Savills Oman, said.
In a report published by the property advisor, it said that the ongoing pandemic has further deteriorated the economic landscape. While the long term impact of the pandemic on the sector is currently unclear, it is evident that there will be increasing challenges over the coming months.
“The impacts of COVID-19 have exacerbated the flaws in what was an already weak market. The projected drop in the number of expatriates in Muscat over the coming months will place the residential market under increased downward pressure in terms of both reduced demand and achievable rental values,” said the report.
However, the agency said that better quality residential units are likely to show a more resilient performance.
Cavendish Maxwell said in a research that property rental prices have significantly declined due to the falling number of expatriates in the Sultanate.
“With increasingly more expats leaving Oman, residential property prices and rents have been impacted. Between December 2018 and December 2019 alone, the total expat population in Oman recorded a year-on-year decline of 2.9 per cent,” the real estate agency said.
Current evidence suggests that a net exodus of highly qualified expatriates started in 2016 due to increasing restrictions on expatriate employment. The number of highly qualified expatriates dropped by 17.6 per cent between 2016 and the first quarter of 2020, while the total number of expatriate employees dropped by 6.8 per cent during the same period.
Savills expects that this reduction in the expatriate population will be accelerated by recent events.