New Cluttons report says rental values are now more than 12% down from year-earlier period
Average residential rents in Oman dipped by 5.9 percent during the first quarter, leaving them 12.7 percent below the year-earlier period, according to real estate consultancy Cluttons.
Cluttons' Muscat Spring 2016 Property Market Outlook report forecast a further 5-10 percent decline in rents during the remainder of this year.
It said transactional volumes across the sultanate were slightly lower than the same period in 2015. Figures showed that the traded value of property in this period decreased from OR1.322 billion in Q1 2015 to OR0.922 billion in Q1 2016.
The report said opportunities exist for landlords in Oman to secure income by offering prospective tenants additional incentives.
It said that landlords who are putting tenants first by offering realistic market rents in line with the current economic reality and increasing incentives such as free access to onsite and local facilities, will likely be the first to benefit once the market does pick up.
According to Cluttons, the decline in rents during Q1 was led by the villa market, leaving average monthly villa rents at just over OR1,004, 14.1 percent lower than Q1 2015.
Cluttons added that wide ranging redundancy programmes in key sectors, with the oil and gas sector still shrinking, are having a direct impact on rental levels.
Philip Paul, Cluttons' head of country, Oman said: "We continue to see increased vacancy levels in stock that is perceived to be secondary, presenting landlords with a significant opportunity to take a long term view and refurbish during these emerging void period.
"With average rents slipping across Muscat, tenants are now benefitting from choice although Cluttons advises that good quality property correctly priced is still being snapped up quickly."
Faisal Durrani, head of research at Cluttons added: "If the expected bottoming out of the market does not in fact materialise, then demand for rental accommodation will continue to decline over the next six to twelve months, putting further downward pressure on rents, particularly as core sectors such as oil and gas, continue to show signs of shrinking.
"With this in mind, it is our expectation that rents during 2016 are likely to fall by a further 5-10 percent, on average, across Muscat."