World Economy

Oman Economy Slows Further, Lay-Offs, Pay Freeze Increase

Most buildings are half empty and looking for tenants.Most buildings are half empty and looking for tenants.

Bounced cheques are increasing across Oman as residents facing pay freezes struggle to make ends meet. The economic downturn in Oman has led to lay-offs, delays in salary payments and a freeze on housing, flight allowances and expenses.

Those residents who have chosen to remain in the sultanate hope they can weather the storm, but some employees are reporting non-payment of salaries for more than three months, leaving landlords with piles of rent cheques they cannot bank, BNA reported.

In some cases, agencies and landlords are demanding a OMR10 ($26) fee to hold a cheque for a month without banking it.

Indian expat Sabita, who lives in Ruwi, said that for the last three months she has been paying OMR10 more to her real estate agent for holding the rent cheques.

“As our salaries are delayed, I have no other option but to call my agent so that he can hold the cheque, and for that he is charging OMR10 more every month,” she said.

“It is totally a tenants’ market now, with most buildings half empty and looking for tenants. Payments are coming late and cheques have started bouncing as people are finding it hard to sustain,” country operations manager of Eqarat, Salman Jalil said.

“In every building there are one or two cases. Earlier there were no cases. Initially, we try to give them more time but if it happens regularly, we hand over it to our legal department,” he said. Eqarat manages more than 1,000 units in Oman.

Property experts, however, said that the landlords are not authorized to evict a tenant over a bounced rental cheque. “They will need a court and/or police order to do so,” according to a property expert.

Another trend developers are seeing is that people are going for shorter contracts. This is because of the uncertainty that some of tenants are facing. Therefore to stay safe they prefer short agreements for three or six months depending upon their situation.

Real estate agents also admitted that the rents are falling all over Muscat and in every street people can notice for rent board put up on their buildings.

The fall in rental rates is attributed to the economic slowdown in the country, following a decline in oil prices by 60% since July 2014, which has, in turn, seen organizations shedding staff in large numbers.

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