While, obviously, we are unable to put Covid-19 to one side, it may help to do so from a health perspective, in terms of seeking to maintain an element of economic clarity, for Omani investors who must currently be facing, at least a lack of confidence and probably worse, and being challenged by a decidedly pessimistic outlook from two diverse perspectives.
First the tourism and hospitality sector must be on a fine knife edge as they face the challenges of the pandemic, with virtually no tourism. Local operators report redundancies, enforced annual leaves, reduced and delayed salaries, and quite simply as one General Manager told me, “The Internet is dead, the phones are quiet, the carpark is empty, and nobody is coming in the door. It’s a complete disaster!” He went on to say that everybody is in the same boat, so he wasn’t crying crocodile tears, but genuinely concerned as he said. “Right now, I can’t say if we will still be there, and whether the doors of the hotel will still be open in a couple of months. It’s not a pretty prospect for any of us.”
I put it to him that New Zealand, being significantly reliant upon tourism, had closures, but also reported good responses to ‘staycation’ marketing campaigns, aimed at attracting locals who would normally be holidaying overseas, not to delay their trips away, but to go local. Using the slogan, “Don’t leave home till you’ve seen your country,” paraphrased from a successful 60’s and 70’s campaign when the country was just dipping its toes into tourism. Pre-Covid research by Seeler (AUT, 2018), had identified that “65% of residents wanted to see more of their country,” so acting upon that the industry has focused, not on profit, but turnover, and promoted affordable family and couples’ options. Tourism NZ CEO Steven England-Hall says, “It won’t fill the $3billion hole, but in capturing a share of the $9billion spent overseas by Kiwis annually, it is critical to the future of the sector.” Maybe, tourism here could use a similar, ministry or sector coordinated, campaign?
Recent discussions with small real estate investors reveal the breadth of issue facing the local economy. A good example is Ali, who lives in Muscat with his family, works in education, and owns another property, a villa, which he purchased as, “An investment, an extra income stream, and a way to pay for my two daughter’s overseas education, as they have ambitious plans.” He laughed as he said that, but the smile faded somewhat as he explained that the villa was, “a nice one, in the ‘right’ part of town, and for the eight years I’ve had it we have had great tenants, expats from one of the big multinational companies, but since May of last year it’s been empty, and although I have it listed with two agencies, nothing is happening. Absolutely no interest at all.” He has a good job, some money in the bank, and fortuitously, the pandemic has meant that both daughters have continued their education online, so they haven’t really touched their savings, and as he put it, “We are doing okay for now, but looking ahead… I don’t know.”
In terms of the rental property scene, most are owned by these relatively passive, family investors, most will have other income, and because the wider family often lives together, multi-streamed, diverse incomes. But no investor budgets to have an empty property. There is no ‘staycation’ parachute for landlords however because the disappearing tenants are not coming back, and not being replaced by incoming expatriates, in the way they were, so the client pool is rapidly emptying out.
The campaign and policies promoting Omanisation are a good thing, and long overdue in the Sultanate, however the pace of change has been astonishing, catching most unawares, and certainly real estate investors. Maybe the ‘new wave’ could have been, and be, managed better? The intent was, and is, laudable, but the staggering number of ‘To Let,’ and ‘For Rent’ signs, especially in the capital, signposts potential social and economic challenges.
Ray Petersen
petersen_ray@hotmail.com
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