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Thursday, 27 May 2010

The Real Estate Bust Hits Oman's Blue City - BusinessWeek

Blue City, a $20 billion real estate development, was supposed to help transform Oman, the Persian Gulf nation of about 3 million people. Government officials extolled the project as an important step in its plan to diversify the economy and prepare for the depletion of oil reserves. But Blue City, envisioned as a community for more than 200,000 people, missed sales targets as real estate speculators left Middle Eastern markets and a legal battle between the project's owners made potential buyers wary. Now it may face liquidation.

Oman, bordered by the United Arab Emirates, Saudi Arabia, and Yemen, has been ruled by Sultan Qaboos bin Said since he overthrew his father in 1970. Heavily dependent on dwindling oil reserves, it managed to boost production in 2009, according to the CIA World Factbook. It's not an OPEC member.

Blue City, an hour's drive from the capital, Muscat, was to be "a whole new city for the present and future generations," according to its website. The first phase would include more than 200 villas, 5,000 apartments, 4 hotels, 2 golf courses, and a clubhouse, according to the prospectus. A total of $925 million was raised from bondholders, and construction started in 2006. Blue City turned down requests for interviews with its executives.