PROPERTY TRANSACTIONS IN JAN-AUG PERIOD SURGE ON RISING OWNERSHIP, EASY MORTGAGE

• Rising trend of property ownership and easy access to mortgage, the sultanate’s real-estate market is witnessing a robust growth this year despite persistent lower oil prices.
• Total value of property transactions surged 53.2 per cent to RO2.94bn during the period from January–August this year from RO1.91bn in the corresponding period of 2014

By Gulam Ali Khan

September 30, 2015

MUSCAT –

With the rising trend of property ownership and easy access to mortgage, the sultanate’s real-estate market is witnessing a robust growth this year despite persistent lower oil prices.

The total value of property transactions surged 53.2 per cent to RO2.94bn during the period from January–August this year from RO1.91bn in the corresponding period of 2014.

The sharp rise in transactions comes on the back of robust growth in mortgage contracts. Traded value of mortgage contracts jumped 79.6 per cent to RO2.05bn from RO1.14bn a year ago, statistics released by National Centre for Statistics and Information (NCSI) showed.

“The growth is more due to a combination of factors including population growth leading to demand-based activity, desire of property ownership in more uncertain economic times and better availability and competitively priced mortgage options,” said Christopher Steel, managing partner at Savills Oman.

“We believe that property ownership is increasing in appeal as there have been a lack of other real investment opportunities for the Oman population at large. There have been no significant rights issues over the period and the stock market is showing signs of sensitivity, therefore property becomes a viable route for investment,” he said.

The number of mortgage contracts rose by 13.2 per cent to 15,001 in the first eight months this year from 13,249 a year earlier.
Steel said mortgages are now more accessible for the population at large with banks and finance houses having tailored their products to meet the requirements of end-borrowers.

“Islamic financing options have certainly appealed to a large segment of the market that previously was not comfortable with traditional mortgage solutions. Also, the financial logic of mortgaging property is now better understood by certain classes of investors.

With most mortgages costing below five per cent per annum and rental returns from most property higher than this, property become basically self financing when geared at circa 70-80 per cent.”

In addition to mortgage transactions, NCSI statistics shows that the traded value of property in sales contracts rose 13.3 per cent to RO867mn from 765mn. The number of sales contracts decreased by 2.3 per cent to 54,220 in first eight months of 2015 compared to 55,521 last year.

Unlike the UAE – where property transaction levels have been falling across Abu Dhabi, Dubai and Sharjah – lower oil prices have not been negatively impacting Oman’s property market.

“There has been no discernable negative affect on the property market as a result of lower oil prices. Certainly, a slowdown in some larger infrastructure projects as a result of reduced government expenditure could negatively impact on some areas of secondary real estate but we believe this will be balanced by the push for diversification into other areas of the economy,” Steel said.

The number of properties issued for GCC states citizens dropped by 25 per cent to 1,670 from 2,233 in first eight months of 2014.

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