The commercial property sector in Oman has seen some significant developments, particularly in the retail market, according to the Oman quarter one 2012 report from Cluttons which has been operating in the sultanate for 25 years.
However, the office sector remains fragile even although demand for office space has rallied over the last six months, spurred by the return to social stability and a significant growth in the economy over the last year, the report says.
Demand for office space remains primarily for smaller, fully finished spaces in the central and western areas of the Muscat capital area, with little demand for space in locations to the East of Qurum.
The recent release of Al Rawaq building in Qurum, Beach Plaza in Shatti Al Qurum and the Tilal Complex in Bausher to the market have injected over 100,000 square meters of Grade A office space into the market while Saud Bahwan Plaza in Ghubrah will provide a further 50,000 square meters of good quality space over the coming months.
With the legislation put forward by Muscat Municipality in 2011 to no longer register or renew leases for villas for use as office space, Cluttons predicts that this change will result in a significant number of smaller companies requiring office space over the next couple of years.
Average rental values have stabilized to a large degree following significant declines from the peak of the market in 2008 but we would expect to see a continued softening of office rental values, particularly for larger shell and core spaces, as demand fails to keep pace with supply.
Additionally, Cluttons notes that a key issue for office buildings in the sultanate remains the provision of suitable levels of car parking. Due to the current lack of formal public transport in Muscat, the majority of office workers must travel to and from work by car. Few commercial buildings in Muscat provide good car parking facilities and, according to Cluttons, this is becoming an increasing problem for many office occupiers as vacant plots currently used for car parking are developed.
Muscat City Centre in Seeb continues to dominate the retail mall sector in terms of footfall and rental values but the Muscat Grand Mall, located in Al Khuwair, is due to open and will provide a similar amount of retail space as part of a major mixed use development.
Providing around 60,000 square meters of retail space, the Muscat Grand Mall is the most significant retail mall, in terms of size, to open in the capital area since 2001. The mall will have 160 retail units anchored by a Carrefour Express and will also provide a multiplex cinema, food court and children's entertainment area.
The Royal Opera House mall (Opera Galleria), which will provide around 6,500 square meters of leasable space, is now due to open towards the middle of this year, almost a year after its initial projected opening date.
The mall is aimed at the high end of the retail market and will have around 60 retail units ranging in size from 50 to 450 square meters in addition to a range of restaurants and cafés. The mall has a proposed footbridge connection to the InterContinental Hotel site which is due for major redevelopment.
SOURCE Propertywire
