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.