The introduction of a real estate regulatory agency in Oman is expected to instil greater confidence among foreign investors and promote better practices in this growing segment.
Early this month the Council of Ministers took a first step towards getting the agency off the ground: it directed that a committee be formed to gauge the opinions of players involved in the sector to determine exactly what the agency could contribute. The aim of this move, the council said, was to assist in the development and organisation of the real estate sector, which in turn would help attract more investment and increase its contribution to the economy.
Functions proposed for the agency include drawing up regulations for the sector, certifying and licensing property developers, streamlining bureaucracy to make dealings in real estate simpler, and providing centralised access to records and data.
A properly structured, specialised regulator could further increase coordination, efficiency and responsive oversight across the sector, said international law firm Curtis, Mallet-Prevost, Colt & Mosle, thereby building on what is already a prudent approach to the real estate sector.
The move would also be in line with the establishment of other regulatory bodies, following on from the privatisation of some state agencies, including those in the utilities and communications sectors.
With the real estate sector attracting increasing attention from foreign companies, it is essential that it be regulated by a properly established authority, said Khalil Bin Abdullah Al Khonji, the chairman of the Oman Chamber of Commerce and Industry, during a meeting with sector representatives in early December.
A statement issued after the meeting said a regulatory agency would help limit any abuses within the sector, such as deception and price manipulation in the buying and selling process, which would further boost confidence in the property market and help to promote growth.
Even without an industry regulator, it appears likely the property market will post solid growth in the coming year. UK-based real estate firm Cluttons said that despite the sales market continuing to be fluid and somewhat unpredictable, with both buyers and owners playing a waiting game, the company was cautiously optimistic about the growth of the residential real estate market for 2012.
“Buoyed by increased oil prices and a robust economy, demand in the residential housing market has never been stronger, but under the constraints of a continuing oversupplied market, buyers and tenants will be very much governing the real estate trends for 2012,” Cluttons said in its end-of-year review of the Oman property market for 2011.
However, a report issued at the beginning of January by real estate consultancy firm Jones Lang LaSalle was somewhat less buoyant than the Cluttons assessment, stating it was likely residential prices in Oman will remain flat throughout 2012. With Oman’s focus currently on tourism and social housing, the broader property market may be less active this year, the report said.
Meanwhile, one challenge that could impact the sector over the coming 12 months is the rising price of construction materials, which in turn are passed onto buyers. According to a report compiled by the Ministry of National Economy in November, the price of steel rose by more than 8% year-on-year at the end of the third quarter of 2011, while timber and plywood was up by 17% and ceramics by 20%. Though cement prices had eased somewhat, higher fuel and freighting costs, along with increases in charges for other materials, more than offset any savings.
While pricing pressures could push up property costs, increased earning power for most Omanis — thanks to wage increases in 2011 and overall growth for the national economy — will mean many will still find real estate more affordable than in the recent past, which should drive the sector to further growth in 2012.