click to enable zoom
We didn't find any results
open map
View Roadmap Satellite Hybrid Terrain My Location Fullscreen Prev Next

OMR 0 to OMR 5,000

More Search Options

OMR 0 to OMR 5,000,000

More Search Options
We found 0 results. View results
Advanced Search

OMR 0 to OMR 5,000

More Search Options
we found 0 results
Your search results

Property Report, October 2019

Posted by Alshima Nasser on October 10, 2019
| 0


The real estate market continues to be soft with further declines in rents and prices. This is mainly due to belt tightening by the government as it mends public finances by shrinking the budget deficit. 

For H1 2019, government revenues were up to RO 5,514 million compared to RO 4,948 million in H1 2018. Howover, expenditure was down from RO 6,353 million to RO 6,175 million in the same period, with the deficit shrinking from RO 1,405 million to RO 660 million. As government spending is one of the main drivers of the economy, reduction in spending is leading to overall softness in the economy. 

It is hard to predict oil prices, but the consensus is that prices will stay low for some time. Austerity is here to stay for a few years. However, there is considerable progress in economic diversification, although, it will take a few years for the non- oil component of the economy to make up for lower oil revenues. 


Demand for real estate is driven by the job market and it is important to track the job market to understand the real estate market.  

The total number of expat employees in the private sector has gone down from 1,787,447 as on December 31, 2018 to 1,745,683 as on July 31, 2019 a decrease of 41,764(2.33%). The number of expats who hold a diploma and above has gone down, in the last two and half years, from 159,506 to 138,504 a decline of 21,002 (13.17%). 

Companies in the private sector are cutting down on manpower costs, to cope with shrinking margins. The continuing decline in well-educated expatriate numbers is putting a lot of pressure on rents and occupancies in investment properties. In most cases, enquiries are not from newly arriving expatriates but from those already in Oman, seeking to move to cheaper or better accommodation. In some cases, expatriate employees are sending back their families and moving to smaller or shared accommodation, owing to job uncertainty. In real estate, supply growth can be arrested but the actual availability itself can not be reduced.


The total number of Omanis in the private sector has gone up from 223,083 as on December 31, 2016 to 258,423 as on July 31, 2019 a considerable increase of 35,340 (15.84%) in about two and half years. Oman now produces a number of high school and college graduates each year, and it is natural that they will replace expatriates, especially in white collar jobs. 

The House mortgage market

Villas are mostly for self-occupation and one would expect demand to be steady with rising employment of Omanis. However, the figures below indicate there is slackening of demand here too.

The latest figures indicate that the number of residential villa permits, in all of Oman, has declined to 23,881 in 2018 from 31,912 in 2016 and 34,925 in 2015. This is a steep drop of about 32% from its peak in 2015. 



Residential Market

With declining number of white collar expatriate employees, rents have declined by about 10% to 15% y-o-y in 2019 compared to 2018. Owners, who have been quick to adjust the asking rents downwards, maintain the buildings in good condition and offer good maintenance services, are enjoying higher occupancies rather than those who are less flexible on rents and who do not maintain their buildings well. 

Office market

Occupancy is a challenge along with lower rents. It is taking a long time  to fill even a mid size building of less than 10,000 sq. m of leasable area. CBD is the worst affected, with major banks shifting to locations that are fast growing. Rents in CBD are distressed and are RO 2.500 per sq. m per month and sometimes even lower. Even in the more attractive areas of Qurum, Al Khuwair, Azaibah etc rents are RO 5/- to 6/- per sq. m per month and sometimes below. Some lower quality office space has come up with very little car park, and these buildings

-we believe- will suffer higher vacancy and lower rents. 

Hospitality Sector

Tourism is one of the bright spots. The number of guests in 3 to 5 star hotels in H1 2019 was 871,578 as against 730,145 in the same period last year, a considerable increase of nearly 20%. Revenues are up from RO 105 million to RO 115 million although occupancy has dropped from 59.1 % to 55.4%. The drop in occupancy is due to the addition of a large number of rooms.

There were about 16,000 rooms in 2016 and it is now up to about 22,000 rooms. The government estimates that 25,000 rooms will be required by 2022 to meet the demand of a growing number of tourists.   

Retail Sector

Retailers are seeing a significant slowdown. At the same time a large number of malls have come up and retailers are seeing sales thinning in each outlet. Malls are experiencing churning with weaker retailers exiting.

Mall owners are lowering rents and some of the poorer performing malls are having difficulty holding retailers and collecting rents.  The Mall of Oman, from Majid Al Futtaim group, with an investment of about USD 450 million is delayed by a year and is now expected to open only in 2021. 

Some of the malls that have opened recently, are finding it difficult to achieve acceptable levels of occupancy. A number of malls have opened in the smaller cities of Salalah, Sohar, Nizwa and Sur in the last couple of years. They are all facing challenges.

Some of the mall owners are offering long rent free periods, and sometimes providing subsidy for interior fit out.  On the outskirts in Barka & Sohar “Chinese” malls have come up offering low priced products.

Property Prices

With the decline in rents, investment property prices have declined. This has been particularly acute in older areas like Ruwi and Wadi Kabir and the outlying areas of Mabelah and Amerat.

Developers are finding it difficult to sell villas in spite of operating on wafer thin margins. Here too prices have declined. 

Selling large plots has become difficult as developers do not see much of an opportunity in developing large projects. 

Changes in laws & taxes

The government is committed to implementing VAT but the date has not been set as yet.  Taxes on leases and on selling properties are already at 5% and we will know the impact of VAT on real estate transactions when the government announces it. Residential real estate, which is about 90% of the real estate market, may not attract VAT, but this remains to be seen.

As part of Tanfeedh, the government has permitted Real Estate Investment Trusts (REITs). The Capital Market Authority (CMA) has published a regulatory frame work.  A few REITs are in the works but as yet there has been no IPO. It remains to be seen if they are attractive enough to interest investors. 

Integrated Tourism complexes (ITCs)

Non GCC expatriates, wanting to invest in real estate in Oman, can do so only in ITCs. Prices in the most popular ITC, Al Mouj, have declined 10 to 15% but prices in the other, less popular ITCs have declined more sharply. An ITC in the out skirts, is finding it difficult to find even first time buyers. A few more ITCs have been announced in a little far-flung areas but it remains to be seen if the projects will actually come up.   

We are probably in for an extended period of modest oil prices and therefore, subdued real estate markets in the whole of GCC. However, hotels in Oman may be an exception if tourism numbers continue to grow. In addition there will be small niche projects that can be profitable. 

Compare Listings