cluttons.

com

Muscat, Spring 2015

RESIDENTIAL MARKET OUTLOOK

Source: Cluttons

Change in rents during Q1 2015

Apartments
Source: Cluttons

Villas

Sur Al Hadid

Maabela

Al Hail/Mawalleh

The Wave

Muscat Hills

Bausher

Al Khuwair

Madinat Qaboos

Azaiba/Ghubrah North

Growth in rents during Q4 2014

2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Shatti Al Qurum

0.3% 0.0%

Average rental values during Q1 2015 all residential

Qurum

The flat performance of the market is also echoed in tenants

budgets, which continue to hover around the OMR 450-500 per
month mark for two-bedroom apartments, rising to OMR 1,0001,250 per month for four- or five-bedroom villas.

For those on lower budgets, more central submarkets such as

Ruwi

While average rents for apartments recorded no increases in 2014, or

during the first quarter of this year, rates for villas climbed marginally by
0.4% in Q4 2014, before stabilising in Q1 2015. On a submarket level,
Muscat Hills retained its position as the most expensive submarket to
rent a property, with average monthly rents standing at OMR 1,250.
Maabela and Ruwi remained the most affordable submarkets, with
average monthly rents varying between OMR 400-500.

High quality properties and access to schools driving lettings demand

Overall, tenants remain budget conscious and continue to target what
are perceived to be good value, high quality properties. At the Al Fardan
Building in Azaiba for instance, there is a long waiting list for the twoand three-bedroom semi furnished apartments. These let for between
OMR 750-850 per month, with tenants repeatedly homing in on the
scheme due to its perceived high quality finishing and attractive rents.

OMR per month

Rental market remains flat

Residential rents across Muscat held steady during the first
quarter of 2015, following the 0.3% rise recorded in Q4 2014.
The stagnation extends the period of weak growth that began last
year, when average rents recorded no change.

Cluttons
Muscat Residential Market Outlook, Spring 2015

Qurum, Ruwi, Al Khuwair and Azaiba/Ghubrah North remain

popular, while monthly rents start from as little as OMR 175 for a
one-bedroom apartment in the western suburb of Maabela.
Western expats continue to dominate the bulk of requirements
at Muscats integrated-tourism-complexes (ITCs), with most
being allocated corporate housing allowances. That said, the lack
of school places within the vicinity of ITCs such as The Wave and
Muscat Hills is prompting some families to consider alternate
locations. The general shortage of school places may start to
compromise the performance of these two ITCs in particular with
their full rental potential being curtailed until the authorities
address the problem. For now however, The Wave and Muscat Hills
remain the two most desirable ITCs in Muscat.
Rental market set to be undermined by oil price weakness
With the oil price volatility continuing and the price of oil
trending below USD 50 per barrel, there is now growing concern
around the economys ability to sustain the robust level of job
creation and overall growth seen over the past 12-18 months.
The subsequent impact on the rental market will be a stabilisation
or even a weakening in demand, particularly as jobs generated by
the hydrocarbon industry still form the cornerstone of lettings
demand. In addition, with evidence from the office market to
suggest that nervousness from the weakness of oil prices is starting
to filter through in the form of stalled expansion plans, the rate of
job creation is expected to slow over the course of the year.
Furthermore, with new supply starting to trickle into the market
at The Wave, with the imminent completion of Marsa III and Siraj,
rental growth here is expected to remain supressed. In addition,
plots are now being offered to third party developers at Muscat
Hills, which is expected to boost the community feel of the area;
however the additional supply is again likely to dampen prospects
for strong rental value growth.

Non-ITC off-plan schemes in high demand

The attraction of ITCs such as The Wave and Muscat Hills to potential
investors remains the capital gains potential, attractive residential
yields and community lifestyle available. This is something that
emerging, or off plan ITC developments are unable to offer. At the
Saraya Bandar Jissah development in south east Muscat, for instance,
although contracts for the first two residential phases have been
awarded during March, the transport and community infrastructure
is still very much in its infancy. Once this is in place, the development
will begin to realise its full price potential.
Away from the ITC submarkets, other areas of the capital continue to
attract a high level of investment from both Omani and GCC buyers.
While GCC buyers dominate residential investment activity in the
local submarkets, Omani nationals are the most active group overall.
The strong track record of investment demand for non ITC
properties appears to have resulted in banks being more amenable
to both funding real estate development and offering more offplan mortgage products. This may however be curtailed sharply
over the coming months should the low oil price environment
persist and dampen economic growth as forecast.
For now however, off-plan properties outside designated ITCs continue
to attract high levels of interest from GCC buyers. In Bausher for
instance, off-plan two-bedroom investment properties remain in high
demand, with yields in the region of 10% being the primary draw.
Developers continue to focus their attention on one- and two-bedroom
apartments in the OMR 35,000-60,000 price bracket, which remain the
most sought after.

Oil price performance (OPEC basket)

120
100

US$/barrel

Residential investment activity remains robust

The sales market has continued to perform well, with Muscats ITC
developments attracting a mixture of buyers ranging from genuine
end users to investors seeking to capitalise on the residential
yields of circa 6-7%. There also remains a group of buyers,
particularly non-resident Indians from the UAE, who are acquiring
one-bedroom retirement properties in order to benefit from
the accompanying renewable residency visas. At an institutional
level, banks too are showing greater interest in acquiring buyto-let assets in the capitals ITCs. Bank Muscat, for instance, has
recently completed a deal worth OMR 30 million to acquire 230
apartments spread across four buildings at The Wave as part of its
plans to develop a OMR 75 million property portfolio.

80
60
40
20

Source: OPEC

For further information, please contact

Steve Morgan
Ian Gladwin
CEO of Middle East
Head of international
steven.morgan@cluttons.com
ian.gladwin@cluttons.com
+9714 365 7700
+968 24564250
Marianne Helme
Residential manager
marianne.helme@cluttons.com
+968 22057800

Feb-15

Mar-15

2015

Jan-15

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Further afield in Al Khoud, in west Muscat, we have recorded a strong

level of buyer demand for 35 villa plots, which are available for OMR
135 psm, underscoring the depth of demand in the off-plan non-ITC
market, which is expected to persist.

Philip Paul
Head of Oman
philip.paul@cluttons.com
+968 2205 7900

Faisal Durrani
International research & business development manager
faisal.durrani@cluttons.com
+44 207 647 7166

Cluttons & Partners LLC 2015. This publication is the

sole property of Cluttons & Partners LLC and must not
be copied, reproduced or transmitted in any form or
by any means, either in whole or in part, without the
prior written consent of Cluttons LLP. The information
contained in this publication has been obtained from
sources generally regarded to be reliable. However, no
representation is made or warranty given, in repect of
the accuracy of this information. We would like to be
informed of any inaccuracies so that we may correct
them. Cluttons LLP does not accept any liability in
negligence or otherwise for any loss or damage suffered
by any party resulting from reliance on this publication.

cluttons.com

2015

1,800
1,600
1,400
1,200
1,000
800
600
400
200

0
/

2014

2015

2,000

0.0% 0.3%

2015

450 500

1.000 1.250

2014
0.4% 2014
.2015

1.250 .

400 500 .

0.3% .2014

.

750 850

.


2015

175

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50

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120
100
60
40
20

10

80

:


steven.morgan@cluttons.com
+9714 365 7700

ian.gladwin@cluttons.com
+968 24564250

faisal.durrani@cluttons.com matthew.wright@cluttons.com
+44 207 647 7166
+968 2205 7917

6.7%

.
30
230
75 .

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.10%

35.000 60.000
.

35
135

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philip.paul@cluttons.com
+968 2205 7900

.. .2015
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