Oman restarts Blue City project

The project will be developed by Grand Blue City Development Company

Oman has restarted its plans to build the long-stalled Blue City project. The project, also known as?Al-Madina al-Zarqa, will now be developed by the Oman Investment Authority-backed Grand Blue City Development Company.?

Egyptian architectural consultant?Engineering Consultants Group is the project consultant for the first phase of the development.?

The design works are ongoing and are expected to be completed by mid-2024.

The first phase includes the construction of?100 luxury villas;?202 lagoon villas;?a five-star hotel;?130?studio, one-, two- and three-bedroom serviced apartments; and 270 residential apartments.

The project is located?along the Al-Sawadi seafront, which is almost 100 kilometres (km) northwest of Muscat.

Project background

The project, first launched in 2005, was led by the local?Al-Sawadi Investment & Tourism Company (ASIT). In 2006, a joint venture of Greece's?Aktor?and Turkiye's?Enka was?awarded a $1.9bn?design-and-build contract for the first phase of the Blue City?development.

Project promoter?ASIT, which included?the local?Cyclone and Bahrain-based?AAJ Holdings, had a 75-year concession from the government to develop the land.

The construction works started shortly after the contract award, but never really gained momentum. The project's progress was slow due to financial issues.?

The 2008-09 financial crisis led further investment in the project to dry up and progress has since stalled. As a result, the scheme was burdened with unsustainable debt levels and has been unable to move forward.?

In 2010, Dubai-based Essdar Investments made an offer to buy notes sold by the?Blue City development at a discount. The company said that it would pay 20 per cent?of face value for class B1 and class C securities.?

Then, in 2012, Onyx Investments – a?subsidiary of Oman’s sovereign wealth fund –?tried?to take control of the project by?offering to buy back about $143m of outstanding bonds issued by Blue City at a price of 35 cents on the dollar.

When it was initially conceived, Blue City was expected to cover 32km?and become Oman’s third-largest city, including schools, apartment buildings and villas. It was viewed as an integral part of the sultanate’s economic diversification.

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