Occupier demand for retail space in Oman has continued to intensify throughout 2014, with high street retail units in Muscat’s densely populated areas operating at near 100 per cent occupancy, according to Cluttons.
In its 2014 Muscat Winter Commercial Market Outlook report, Cluttons says that the strength of demand for high street units is reflected in the fact that rents are generally equivalent to those achieved by top tier malls.
“Despite the surge in mall retail space, high street retail has continued to remain popular, especially in densely populated parts of Muscat, with Ruwi High Street, Al Khuwayr Commercial Street, Seeb High Street and Al Khoud High Street all operating at near 100 per cent occupancy.” It added that at the top end of the market, rental values for up to 75 sq m high street space can reach RO25 per sq m, the report said.
Philip Paul, head of Cluttons Oman, said, “Retailers on Muscat’s high street focus on the requirements and spending power of the general population rather than being more aspirational, as is generally the case with the larger malls. While these outlets are perceived to be lower quality, they remain highly popular within the market. The wider retail market has also remained very vibrant.”
According to Cluttons, the demand for mall retail space is also surging, with 380,000 sq m of new-generation mall space set to become available over the next two years. The addition of value brands to Muscat’s shopping malls persists and this is an emerging strategy for most mall operators.
While mall operators may be reconfiguring their retail offerings, the report said that the hypermarket sector has continued to create and capture further market share and remains central to the retail mix at most major shopping malls.
On office space market, Cluttons revealed that average monthly office rents held steady at between RO4 and RO8 per sq m in most submarkets during the first three quarters of 2014. This does however mask the fact that rents for more secondary and tertiary space are still experiencing gradual declines, while ‘grade A’ rents in desirable schemes are holding steady.
Paul said with ‘grade A’ office space pipeline limited, strong demand for higher quality schemes has encouraged a number of developers to step into the office market. “In particular, there is heightened development activity in the airport heights area, which is quickly emerging as the capital’s new CBD, away from Old Muscat.”
On the industrial sector, the report indicates that there has been a reconfiguration of industrial estates around the capital, as occupiers relocate and reposition themselves after the closure of commercial operations at Port Sultan Qaboos.
“Despite this movement, rents have remained unchanged through the first three quarters of 2014. Monthly warehouse rents have held steady at between RO2 and RO4 per sq m across all major areas. With strong occupier demand unlikely to ebb in the near term, rents are likely to begin drifting upwards early next year, once the Sohar free zone becomes saturated and occupiers are forced to seek out space in a supply constrained market,” the report added.© Copyright - Muscat Daily