MUSCAT: A wave of new commercial space coming onto the Omani market combined with increasing optimism from consumers suggests that the country's retail sector will soon be racking up more sales. As a whole, retailers in Oman emerged from the financial crisis in good health, with most major outlets posting solid profits. Reports that the domestic economy will expand by around 5 percent this year have been accompanied by a flurry of new openings both in the capital, Muscat, and in other cities. Unlike some other Gulf countries, Oman does not suffer from a glut of shopping space, according to property management firm Cluttons. The firm said in a July report that while Muscat has around 300,000 sq meters of retail space with a 100,000 sq meters more becoming available in the next 15 months, there is still room for expansion and new developments. “Due to the relative shortage of high quality retail space in Muscat, most retailers are willing to pay high rental [prices] for good quality retail outlets,” said Cluttons. “We foresee rental rates remaining stable for established retail centers with a high footfall and for new developments exploiting a niche market.” Cluttons cautioned in its report that only new developments that distinguish themselves in terms of quality, design and facilities were likely to prosper, adding that retail space which has a leading anchor tenant should generate strong demand. One such development is the Royal Opera House, which is due to open in the first half of 2011. With some 60 retail and restaurant units and just 6500 square meters of commercial space available for the prestigious location, property management firm Savills Oman is expected to seek top-end retailers such as fashion houses and perfumeries. Omani retailers may also be buoyed by a report released at the end of September that showed consumer confidence to be on the rise. In a study conducted by online employment agency Bayt.com, in conjunction with research specialists YouGov Siraj, 51 percent of Omanis felt their economy would improve in 2011, with a regional low of just 8 percent saying they thought economic conditions would worsen. Footfall numbers, especially in high-end retail centers, could also receive a massive boost in the coming years thanks to state-backed initiatives to promote tourism. Having set a target of attracting 12m overseas visitors by 2020, the government is investing heavily in tourism related infrastructure such as new or upgraded airports and shipping terminals to ensue its goal is met. Many new developments, such as a convention and exhibition centre to be built near Muscat's Seeb International Airport, are being designed to incorporate a commercial component, with the airport development set to include 125,000 sq meters of retail space. While there is still a growing demand for top-end retail space in Oman, developers and operators will need to be careful not to create an oversupply of floor space, with a measured approach to expansion likely to be the best way of ensuring a balance between quantity and quality.
