(MENAFN- Muscat Daily) Investment activity in Muscat remains the key driver in the capital's residential market as institutional investments and infrastructure spending continue to fuel sales according to a report by leading real-estate consultancy Cluttons.
Cluttons' Spring 2015 Muscat Residential Market Outlook Report highlights the steady growth of Oman's sales market with Muscat's integrated tourism complex (ITC) developments attracting a mixture of genuine end-users and investors seeking to make use of rental yields which stand out at around six to seven per cent.
'We are currently seeing a lot of activity in the sales market with non-resident Indians from the UAE in particular purchasing one-bedroom retirement properties in order to benefit from the accompanying renewable residency visa' Philip Paul head of Cluttons Oman said.
At the institutional level banks too are showing greater interest in acquiring buy-to-let assets in the capital's ITCs Paul said adding 'Bank Muscat for instance has recently completed a deal worth RO30mn to acquire 230 apartments spread across four buildings at The Wave Muscat as part of its plans to develop a RO75mn property portfolio.'
According to the report ITCs such as The Wave Muscat and Muscat Hills continue to attract investors through their capital-gains potential attractive residential yields and community lifestyle offerings. Away from the ITC submarkets other areas of the capital continue to attract a high level of investment from both Omani and GCC buyers with Omani nationals being the most active group Cluttons said.
Faisal Durrani international research and business development manager at Cluttons said the strong track record of investment demand for non-ITC properties appears to have resulted in banks being more amenable to both funding more real-estate development and offering more off-plan mortgage products.
'This may however be curtailed sharply over the coming months should the low oil price environment persist and dampen economic growth. For now however off-plan properties outside designated ITCs continue to attract high levels of interest from GCC buyers' he added.
The report says that with the oil price volatility continuing there is now growing concern around the economy's ability to sustain the robust level of job creation and overall growth seen over the past 12-18 months.
'The subsequent impact on the rental market is expected to be a stabilisation or even a weakening in demand particularly as jobs generated by the hydrocarbon industry still form the cornerstone of lettings demand. With evidence from the office market suggesting that nervousness from the weakness of oil prices is starting to filter through in the form of stalled expansion plans the rate of job creation is expected to slow over the course of the year which will have implications for demand in the residential market over the short to medium term' said Durrani.
According to Cluttons overall tenants remain budget conscious and continue to target what are perceived to be good value high quality properties.
'Western expats continue to dominate the bulk of requirements at Muscat's ITCs with most being allocated corporate housing allowances. That said the lack of school places within the vicinity of ITCs such as The Wave Muscat and Muscat Hills is prompting some families to consider alternate locations' Paul added.
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