It is almost as if, on January 1st 2016 there was a collective sigh and Oman firmly braced itself for a new more challenging economic scenario. The previous reliance on higher oil prices to support the rapid growth and development of the country could no longer be relied upon and the previous dalliance with much needed economic diversification away from oil became an overnight and urgently needed necessity.

But this has yet to translate into any significant property market downturn for the rental sector. What is apparent is the housing budget cuts being imposed by corporates and the change of new hires from traditional family size units to singles and couples. Muscat fortunately has benefited from a large supply of new quality apartments over the last two years and these have been rapidly taken up by the newly arriving expats and those that have had to forego larger housing options as a result of budget cuts. This has to some extent lead to an increase in the number of older style, larger family style villas available for rent but landlords are as yet to reduce their rentals for these to encourage early letting. Landlords of these properties are however noted as agreeing token downward rent adjustments upon lease renewal to retain their tenants and avoid vacancy and re-letting costs. We expect this trend to continue with larger, expensive villas seeing increasing voids on tenant vacation and ultimately landlords reducing rents to ensure continued occupation.

Whilst the large number of new apartment developments have been welcomed in the light of the changing demographics of ex patriates arriving without large families accompanying them, there now exists a real possibility of oversupply and rental stagnation for this property type as significantly more enter the market. It is estimated that there will be over 1,600 new apartments (central areas) entering the rental sector over the next 12 months. Whilst those developments offering good amenities and management are likely to be less affected, periods of vacancy are likely to grow with a corresponding downward pressure on rentals.
 
Bausher is now firmly establishing itself as a preferred residential location. With proximity to the ever expanding shopping malls, expressway and recreational facilities, it has transformed itself from being the ‘alternative’ place to live to now one of the most highly demanded areas. Bausher offers housing of all options ranging from multi apartment complexes to luxurious villa compounds.

The traditionally favored central areas are being impacted by the reducing family sizes renting property. The larger villas are taking longer to rent and whilst landlords are currently reluctant to reduce rents, marginal declines are being noted.

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