Interview: Nasser Al Sheibani
How much concern is there among developers about oversupply in the market?
NASSER AL SHEIBANI: It is no secret that the local market is going through a difficult period, given the overall macroeconomic situation of the country. The supply of property continues to grow despite the fact that demand is not growing nearly as quickly. This downturn has been exacerbated by a number of regulatory changes, including the municipality’s decision to raise taxes on real estate transactions from 3% to 5%, which has further depressed activity in the market. However, we view the current turbulence in the sector as cyclical, especially considering that this difficult period follows years of strong growth in real estate.
We see this downturn having a maturing effect on the market, as customers veer towards better-constructed projects with modern amenities. It is the low-quality and poorly planned projects that will suffer during this period, and we have already seen tenants moving from older to newer developments that take into account parking needs, better finishings, new technology and in-demand facilities. We have likewise seen overall rapid uptake of new projects that are well planned and well executed. This follows a trend that has been witnessed over the past few years of a gradual migration from the older parts of the city to new developments.
How will urban and brownfield developments impact the Omani property market?
AL SHEIBANI: The new trend towards master-planned cities, which have seen great success in other markets, is a positive development for Oman. These sorts of developments lend themselves to proper planning and integration, allowing for a balance between residential, commercial, hospitality, leisure and public spaces. Such developments also offer numerous opportunities for tie-ups between the public and private sectors.
However, also essential to the success of these projects and their integration into the city is proper planning, investment and development of public infrastructure, especially as it relates to transportation. While Oman’s road network is currently considered to be among the best in the world, it is essential that the government continue to invest in this area, and the development of public transport systems, especially considering the sultanate’s rapid population growth.
How viable would it be to further open up the market to foreign buyers?
AL SHEIBANI: It is certainly viable, but it must be done in a planned and controlled manner. In other markets where they have rapidly liberalised buying regulations, it has not worked well and has sometimes created friction in the community and contributed to soaring property prices that push out locals. But if you controlled it and allocated a certain percentage of a neighbourhood or a master-plan community to foreign buyers, while ensuring you do not negatively impact the local culture, it would be a win-win situation. The country would attract additional foreign capital and new human talent.
Are current hotel development plans sufficient to address the growth of the tourism sector?
AL SHEIBANI: We are moving in the right direction, and we will soon see a number of new luxury hotels in Muscat that are much needed. But while there are numerous projects under way, the city needs more. Muscat is routinely rated among the most expensive cities for tourists given the prices charged for rooms, which is in large part due to a lack of supply. If we want to promote inbound tourism and see the sector grow to the point that it becomes a true pillar of the economy, we need to ensure that we have quality products at the right prices. Current prices undermine sector growth. Outside of the Muscat region, the government’s focus on experiential tourism as part of the 2040 strategy is again the right direction towards unlocking the potential of the tourism sector across the country.