x Abu Dhabi, UAETuesday 25 July 2017

Oman city's property prices fall victim to street protests

After four months of protests, commercial premises in the industrial city of Sohar are on the market at a third of the price they were in December.

MUSCAT // The violent protests in the industrial city of Sohar, which ended the first week of May after four months, have led to a steep drop in property prices and an increase in vacancies.

"I have six multi-floor commercial buildings in my book that are now on the market at a third the price the owners had originally demanded in December, a month before the protests had begun, ," Khalid al Jahwari, an estate agent in Sohar, said.

"There are still no takers even though there are no more protests here in the city."

Another estate agent said many tenants have moved out of the city to adjacent towns such as Saham and Khabourah.

"They vacated the villas and flats at the height of the unrest to move out to the nearby towns and drive here to work every morning," Ahmed al Ajmi said.

"The going price for a three-bedroom villa was 450 rials [Dh4,292] in December and now you can get it at 220 for the same property.

"The same proportion with the apartments."

More than 15 billion rials in construction projects are in the works in Sohar, including the Port of Sohar, the Free Trade Zone, Sohar Aluminium, Oman Polypropylene, Oman Vale, the Sohar Refinery power stations and a new airport.

The city has attracted thousands of workers to high-paying jobs since 2006, and property investors enjoyed good returns until the protests demanding political and economy reforms hit the country in January.

Mr al Jahwari said that one of his clients is asking 4 million rials for a block of flats but has received an offer for only 2.5m rials.

Investors admit they have suffered financially.

Ramadhan Abu Hamdoon, a Muscat-based investor, said: "I have put my commercial building up for sale as well as three plots of land in Sohar.

"I know I would not get the price that I would have got before the protests began but I need to clear my debt with the banks."

Another investor said that at the current rental prices, it would take him additional years to pay off the initial capital he used to build his villas.

"My twin villas finished in February and I rented them in April at 40 per cent less than the price I expected," Harith al Harthy said.

"That means, at this rate, I have five more years to pay off the capital I invested in them, from the initial 10 years."

Bankers say that because of the violent protests some developers have fallen behind in their loan payments and are encouraging them to sell their properties to settle their debt.

"We cannot name these developers for legal reasons but they are struggling to meet their debt obligations since the housing demand in Sohar has not increased dramatically due to protests," a Bank Muscat official, who spoke on condition of anonymity, said.

"We urge them to sell them off at cut prices or risk repossession."