Latest trends: New stock additions during past five years keep market oversupplied
The real estate industry of the Sultanate of Oman – an important pillar of domestic economic growth – has bounced back to pre-pandemic levels, but the returns from property sales or rentals are nowhere near the peaks witnessed in the fourth quarter of 2014, according to a key report.
Oman REIT Fund, a publicly traded real estate investment trust fund, revealed that real estate activity rebounded “strongly” in 2021 from the “pandemic-induced sluggishness” of the previous year.
Citing figures published by the National Centre for Statistics and Information (NCSI), the MSX-listed Fund noted in its latest Chairman’s Report that the total value of traded property in the Sultanate Oman grew 4.3 per cent to RO 2.56 billion in 2021, up from RO 2.46 billion in 2020. The uptick signalled the “sector’s resilience amid easing pandemic restrictions”, said Mustafa Ahmed Salman, Vice-Chairman – Oman REIT Fund.
Reflecting the strong revival of market activity last year, the total number of real estate transactions surged 27 per cent to 106,696 in 2021, up from 83,805 in 2020, he stated.
Property transactions have also returned to levels witnessed before the pandemic, according to the official. “During the 12 months period prior to onset of Covid-19 Pandemic, there were an average of RO 246 million worth of properties traded every month. After the onset of pandemic, this value reached average of RO 189 million a month, a decline of 23 per cent. However, during 2021, the average value of property transactions improved to RO 229 million per month.”
In parallel with this uptrend, mortgage activity too has rebounded sharply, the Vice-Chairman pointed out. The traded value of mortgage contracts had reached RO 1.34 billion in 2021, which was still below pre-pandemic levels, but the number of executed mortgage contracts soared 21 per cent to 18,082 contracts in 2021 from 14,864 a year earlier, he said.
But property values and rents still continue to stagnate below levels recorded during the last peak nearly eight years ago, he noted. “Despite the growth in volume of transactions, decline in property values and rents for residential property continued during 2021 from the previous market peak observed in 2Q14,” he said.
This was attributable to a combination of factors, notably new stock additions in the last five years. Average value of mortgage transactions also declined 24 per cent year-on-year between 2020 and 2021, the Vice-Chairman added.
Oman REIT Fund achieved a net profit of RO 1.83 million in 2021. The fund distributed two interim cash dividends of 1.75 per cent each to unitholders, resulting in total dividend distribution of RO 1.649 million till December 31, 2021. Total assets of Oman REIT Fund as of 2021-end were RO 48.66 million, out of which RO 44.42 million are in property investments, effectively making Oman REIT Fund the largest listed REIT in Oman.
