Challenging market conditions have led to flexible and revised approaches from landlords across Muscat in an effort to entice prospective tenants, according to real estate consultancy Cluttons.
The Cluttons Muscat Spring 2017 Property Market Outlook has identified an increasing flexibility of finance terms, as landlords work to ensure high occupancy rates at a time of weaker demand across the real estate market.
It said subdued economic activity across the sultanate has also led to increased opportunity for tenants in the office market, as declining rental rates has led to office consolidation and migration to more affordable stock.
Cluttons said that during 2016, average rents across Muscat receded by 10.1 percent, with the final quarter seeing declines of 4.2 percent.
It added that 2017 has begun on a more stable start, with rents during the three months to the end of March declining, on average, by a marginal 0.6 percent, suggesting some locations may be starting to show signs of bottoming out.
Philip Paul, head of Cluttons Oman, said: “Tenants are aware of the opportunities for more value in the market, so those landlords that are taking a more proactive approach to the conditions are the ones best placed.”
Faisal Durrani, head of research at Cluttons added: “With GDP growth forecast to slow to 0.4 percent this year, from 1.5 percent last year, the prospects for a sudden surge in job creation rates and subsequent increase in the level of requirements for rented accommodation remain low.
“That said, the slowing rate of rental declines in the first quarter suggests we may at last be starting to see the first signs of the market gradually bottoming out.”
He added that rents are likely to dip by between 5-7 percent during 2017, which assumes little change in rents over the next three quarters.