Interview: Ziyad M Al Zubair
What impact will Oman’s young population have on the real estate sector and job creation?
ZIYAD AL ZUBAIR: According to the Economist Intelligence Unit, 24% of the GCC population will be under 15. In Oman young people account for more than 20% of the total population, and this figure is expected to grow.
The social and economic implications of this demographic trend are dramatic. Oman’s economy must continue to grow in order to meet the expectations of an expanding society that will require better education, improved working conditions and sufficient employment opportunities. The growing Omani youth population and its future needs will be a key driver for real estate development. The demands of a growing economy and population will require new shopping centres, hotels, schools, office buildings and housing to be built. For Oman’s youth, employment opportunities lie in the many products and service industries needed to support new real estate developments. The services directly associated with real estate activities include architecture, engineering, consultancy, brokerage, development, sales and management. As the population grows, so too will the real estate opportunities via new developments and job creation.
What more needs to be done to encourage greater foreign investor participation in the sector?
AL ZUBAIR: Oman must continue to promote an environment of sound policies, a clear body of laws and a solid regulatory framework. By establishing institutions to enforce laws and regulations that are viewed by investors as fair, efficient and transparent, Oman can attract foreign direct investment (FDI) to the real estate sector. Oman needs an association that will ensure collaboration and transparency in the sector and to oversee future housing developments. This association must have the potential to create an environment that promotes knowledge transfer that can lead to a comprehensive understanding of real estate trends, as well as generating market data. Creating an environment where market information is readily available will raise the quality of the data available, improving the investor’s ability to make well-informed decisions. To an investor, transparency reduces risk and thus promotes investment. Success in attracting FDI to the real estate sector will only be achieved by contributing to the development of professional practices and raising the level of transparency.
What conclusions can be drawn in light of the current oversupply of office space?
AL ZUBAIR: When performing market analysis of any real estate segment, two perspectives are taken into account; the first is the quantitative perspective of the supply and demand factors of the market and the other is the qualitative perspective of the existing product base. Our indication from a quantitative perspective is that the market is over-built, that the oversupply is driving down prices and that the financial performance of investments is below the expectations of investors, considering the risk involved. When we address the issue from a qualitative perspective, there is a shortage of well-planned, well-designed and well-managed office buildings in the market. The relevance of these factors to the development practice is that a competitive advantage can be achieved by producing a higher-quality product or office environment. A superior office product will translate into a transfer market in which customers will begin to leave the inferior product for one that addresses their needs in a quality environment. This begs the question, “What is required from a quality commercial office building?” First, we consider the issue of best practices in architectural design; buildings must be safe, comfortable and well-planned to meet the needs of today’s technology. Additionally, real estate developers have to think about the total office experience and bring to the market products that take into consideration the management of facilities, amenities and sufficient parking to meet the needs of the end users.
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