The pace of retail mall development has slowed significantly in Oman and will not rebound in the short to medium term, according to real estate consultants Cluttons.
In a new report on the country’s real estate market, Cluttons said the demand for large-scale retail projects had been “sated to a large degree”.
The report said the only large retail mall currently under development was the 60,000 sq m Tilal Grand Mall in Al Khuwair but that was delayed.
It added that the retail development sector was unlikely to see any quick turnaround because “levels of per capita disposable income are relatively low in comparison to other GCC countries”.
“Interest remains good for smaller scale retail malls in niche locations aimed at high-end consumers. These are attracting significant tenant interest and high rental values,” the study said.
Cluttons added that the supermarket sector was continuing to expand with the Lulu chain of hypermarkets recently opening a store in Salalah with additional chains planned for Buraimi, Nizwa and Khasab, taking the total number of Lulu outlets in the Sultanate to 11.
In 2010 it was estimated that Oman offered 300,000 square metres of leasable space within retail malls
On the residential real estate market, Cluttons said although Oman was still affected by international uncertainty and market volatility, there had been some positive signs over the past year.
“However, growth prospects appear good in the long term and the company’s expectations are for the market to rebound slowly but surely over the coming years,” the report said.
It added that demand was rising for affordable housing and several developers were increasing the number of affordable units it was building.
For the rental market, Cluttons said new tenant housing budgets have seen a decrease of 25-30 percent while villa rental figures had softened since Q4 2010.
“There are some signs of increasing stability in the residential leasing market but further softening of rental values can be expected in the short to medium term, particularly as the supply of new apartments comes into the market,” the report said.
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