Compared to 1,712,798 expat workers at the end of 2019, there were 1,443,128 in Dec 2020
Muscat – With a large number of rental real estate properties lying vacant, tenants are becoming more demanding, while landlords are bending backwards and giving freebies to accommodate and retain tenants.
Some landlords are offering free WiFi and others are giving a one-two month rent waiver, while others are on their toes to provide any maintenance requirement immediately.
“The expectations of tenants are growing high due to oversupply of rental properties in the market. Now they expect the landlord to replace leaking taps in a day or two because they know they will find a cheaper and better property in the market,” said Ihsan Kharouf, head of Savills Oman.
Mohammed Hidayatullah, building supervisor of Ahmed Industrial & Contracting Enterprises, said that his company includes full maintenance in rental agreements. “Keeping the market conditions in mind, we reduced rent by around ten per cent for all our tenants. We also offer discounts on rent if paid quarterly or yearly in advance.”
The real estate market has felt the burden of the combined effect of the pandemic and mass exodus of expatriate workforce. Compared to 1,712,798 expat workers at the end of 2019, the number fell to 1,443,128 in December 2020, according to the National Centre for Statistics and Information (NCSI).
Retain and attract
Tenants are happy that landlords are more responsive to their grievances.
For M Ali, a Ruwi resident, the pandemic forced his company to reduce salaries compounding the misery of delayed salary transfers, which necessitated him to negotiate with his landlord.
“Surprisingly, the landlord’s response was polite and understanding. For the first time our landlord visited and asked if any maintenance was needed.”
Ali got a reduction of RO20 in his monthly rent and a one-month rent waiver for renewing the tenancy agreement.
Another tenant, Abdul Salaam moved to a four-bedroom villa in Ghubra from a three-bedroom flat in Al Khuwayr recently. The apartment block in which Salaam was residing was almost empty and building maintenance was deteriorating by the day.
“Since the pandemic started, maintenance started taking longer and at times they removed fittings from the vacant flats to replace in the tenants’ flats.”
He finally decided to move out and found a villa which fits his needs and in the area of his choice.
“Nowadays, landlords are more flexible compared to the pre-pandemic times. With a little more money, we are living in a better environment. Since schools are online now, there is scope of some physical activity for kids and for us here.”
Besides the economic slowdown and job losses due to the pandemic, the removal of electricity subsidies has added to the woes of landlords.
“People allocate a combined budget for electricity, water and rent. When someone’s electricity bills double, it is obvious they try to balance it and no one can cut the usage of electricity or water. The only option left is either re-negotiate the rent or move to a cheaper apartment to manage the budget,” said a tenant looking to relocate to reduce his monthly outgoings.
Kharouf, from Savills, believes that landlords who are luring tenants survive and see a high occupancy rate.
“Landlords can choose whichever response they like. They can let properties at a somewhat higher rate than the market with 60 per cent occupancy, or if they wish 100 per cent occupancy they need to keep it slightly below the market rate.”
“They must, however, remember that there are around 70,000 plus empty units in the city. Even if they offer the property at below the market rate, there still will be many vacant units left to let.”
While some landlords are offering freebies, “heavy capital investments like providing ACs are not happening in older properties”, Kharouf said.
Hidayatullah’s company manages around 400 flats and is doing well by offering freebies.
“Occupancy is almost 100 per cent, with only six flats vacant. We find new tenants in a maximum of three months,” he added.
To retain and attract new tenants, Hidayatullah’s company is planning to provide free AC maintenance and free Internet.
“We always provided free maintenance and now since the removal of electricity subsidies, we are even replacing old fittings with more efficient electrical fittings.”
Ali remarked, “Acquiring new tenants is difficult in this current situation. I think landlords realised it now. This was not the case earlier.”
For Kharouf, “whatever movement is happening in the rental real estate market is like musical chairs”.
He is hopeful that with the resumption of flights, newly recruited expatriate workforce will start moving into the country bringing some relief for the rental real estate sector.