The rental market has stabilised in Oman's capital Muscat with no change experienced in the average rents of two- and three-bedroom apartments during the third quarter, said a report.

The rental value growth for two- and three-bedroom apartments during the first three quarters of 2014 followed a path of stabilisation, following a 0.7 per cent rise in the previus quarter, stated property expert Cluttons in its Winter 2014 residential market outlook for Muscat.

This equates to a 2.3 per cent rise during the 12 months to the end of the third quarter of 2014, with two-bedroom apartments (3.1 per cent) outperforming three-bedroom apartments (1.5 per cent) over the same period.

Two-bedroom apartments in Azaiba remained amongst the most sought-after area in the Omani capital due to their relative affordability, with average rents standing at RO550 ($1,424) per month at the end of the third quarter.

In particular, the area’s location midway between Old Muscat and the new emerging areas to the west of the capital continues to draw in families seeking a relatively central and affordable base, said the Cluttons report.

The strong levels of demand have not been matched on the supply front and this has aided the sharp rise in rents, it added.

The robust level of economic activity, which continues to be underpinned by the government’s heavy inward investment programme, is still driving job creation across the Sultanate.

Overall the jobs growth has directly boosted tenant demand and we have recorded a particularly high number of new starters from the hydrocarbon and construction sectors.

This compares to three-bedroom apartments at The Wave, which averaged RO950 ($2,459) per month during the third quarter.

The villas too recorded no change in rents during the third quarter; however the average rents now stand 4.8 per cent ahead of this time last year. On an annual basis, four-bedroom villas have seen the most significant change, with monthly rents rising by just over seven per cent to RO1,610 ($4,169).

The robust level of tenant demand remains centred primarily around the higher end of the market and on villas in particular. This has led to a number of developers rushing to deliver new residential stock to the market as they move to capitalise on the depth of requirements, as evidenced by the number of feasibility study requests we are receiving.

"The majority of this planned supply is however expected to be at the middle to lower end of the quality spectrum and demand is likely to be limited for such schemes, with take up expected to be driven by the amenities available, the quality of the finishing and pricing, in that order of importance, although apartments in Azaiba remain an exception to this," stated Cluttons in its report.

"As a consequence, further divergence in the already two-tiered rental market is expected to follow, with rents at the higher end of the market likely to move upwards at an accelerated rate. This is our central scenario," it added.

The sales market remains buoyant as number of non-resident-Indians purchasing retirement homes in Oman to capitalise on the relative affordability when compared to places like Dubai, and the added attraction of a property-ownership linked residential visa, continues to gather pace.

In general, retirement property hunters’ budgets hover around the RO100,000 ($258,947) mark, with one-bedroom apartments at The Wave being amongst the most sought. Although there is activity at the RO300,000 to 500,000-mark ($776,840 to $1.29 million), this is limited and largely confined to first time buyers, or buy-to-let investors, said the property expert in its report.

The Wave’s attractiveness is set to be further bolstered by the projected completion of the five-star Kempinski hotel in 2015 and the four-star Wave Village Plaza Hotel operated by Shaza Hotels, which is due to complete in 2017.

"With two more hotels being planned and a real community feel now beginning to emerge as retailers move into the recently completed Al Marsa Village Retail Centre, we expect to see further upward pressure on capital value growth rates as the development becomes an increasingly desirable place to live," said Cluttons.-TradeArabia News Service