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Thu 29 Mar 2012 03:22 PM

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Oman's office prices tumbled 33% last year

Oversupply has led to a slump in prices, despite a lack of prime quality units

Oman's office prices tumbled 33% last year

Commercial property prices in
Oman fell by a third last year as an oversupply of units began to take effect,
according to a new report.

At the end of the third quarter
of 2011, graded office stock stood at around 600,000 square meters in Muscat,
with an additional 250,000 square metres expected to come on stream over the
next five years, according to a study by investment bank Alpen Capital.

As a result of the surge in
supply, prime office rentals in Muscat, especially in the Shatti Al Qurum
district, fell by around 33 percent between 3Q2010 and 2Q2011, the study
found.

“We believe, prices as well as
rentals will continue their downward spiral in the near-term,” Alpen Capital
forecast.

Despite this, Grade A buildings
which meet the requirements of multi-national companies still remain in
short-supply. However, this situation might change in the coming year with the
completion of several office buildings like Al Rawaq Building in Qurum and
Tilal Complex in Al Khuwair.

Like its Gulf neighbours, Oman
has begun to establish free zones in order to attract commercial companies to
the sultanate and boost economic activity.

There are currently two new free
zones under development, namely Al Duqm Free Trade Zone and Sohar Free Trade
Zone.

“We expect the completion of
these Free Zones to boost demand for commercial office space in Oman,” the
report added.

In a further development, it was
announced in January the Council of Ministers took a preliminary step towards
setting of the regulatory body for the real estate sector and has set up a
committee to determine its structure and role.

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