Cluttons report says increased job creation is underpinning strong demand in Omani capital's residential market
Increased demand in both the residential sales and lettings markets across Muscat has been underpinned by an increased level of job creation, with both buyers and tenants focusing their attention on higher quality schemes, according to a new report by Cluttons.
According to its Muscat Spring 2014 Residential Market Outlook Report, tenant demand has improved in line with increased job creation.
This has been in part driven by the government's heavy investment in transportation and energy infrastructure upgrades, the report said.
The increased interest in higher quality properties is set to lead to a widening gap between prime and secondary locations throughout the city in the near term, according to Cluttons.
The report also highlighted that foreign investment in Oman's residential property market has also risen in the past year, in particular from UAE-based non-resident Indian (NRI) buyers who are looking at alternative markets to Dubai where prices have soared in the past year.
In the rental market, where attention is centred on schemes perceived to offer better quality accommodation, two-bedroom apartments and four-bedroom villas remain the most sought after across Muscat, Cluttons added.
The report said strong demand for larger villas in particular, coupled with limited new supply, has helped to drive up rents during the first quarter of the year. Monthly rents for four-bedroom villas have risen across most submarkets, with Azaiba (9 percent) showing the strongest growth this quarter.
However rents for two bedroom apartments have remained largely stable over the same period, the report added.
Philip Paul, head of Cluttons, Oman said: "With an increased emphasis on quality, The Wave and Muscat Hills are two developments that are currently enjoying a resurgence in demand, with The Wave recently bringing forward the release of its Reehan Residences to satisfy investor appetite. At the same time, the rising levels of inventory here will help to address some of the pent up tenant demand for The Wave."
The report said that the sales market is showing a significant increase in demand for completed residential properties.
It added that a degree of pent up demand from Omani nationals, which is being driven by a gradual build-up of home ownership aspirations, has resulted in many households now opting to step on to the property ladder, buoyed by rising market confidence levels.
Paul said: "On the supply front, we feel the market has room to absorb further residential schemes and prices are, to a large extent, currently being supported by the dearth of stock. That said, developers are mobilising on sites such as Saraya as they move to capitalise on the strengthening appetite to purchase"
According to the report, foreign investment in to Oman's residential property market has also risen in the past year, in particular from UAE-based non-resident Indian (NRI) buyers.
Steve Morgan, CEO Cluttons Middle East added: "We have recorded an upturn in the number of non-resident Indian buyers from the United Arab Emirates entering the market over the past six months.
"With prices rebounding in Dubai, an affordability threshold may have been breached and with regulations surrounding retirement properties not entirely clear, it would logical sense for this group to look at nearby markets such as Muscat."