|But the Blue City, seen as a community of over 200,000 people, was the target sales of real estate speculators left the market in the Middle East and the legal battle between the owners project has potential buyers wary. Now he can face liquidation.
Oman borders the United Arab Emirates, Saudi Arabia and Yemen, closed the Sultan Qaboos bin Said since he overthrew his father in 1970. Heavily dependent on declining oil resources, has managed to increase production in 2009, according to the CIA World Factbook. It’s not OPEC.
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.
In November 2009, sales of Blue City property amounted to $ 75 million, against a forecast of 860 million dollars, according to Khalid Howladar, Investors senior loan officer at Moody's Service in Dubai. The business model has been to continue building with the purchase payments received, said Howladar. Now there are no buyers and those who do not buy more pay, then there is no cash flow. Ayjaz Mohamed, general manager of Hamptons International in Oman, which was responsible for marketing the project from 2007 until mid 2009 said that 400 of the 5,000 properties for sale were sold.
Currently idle yellow crane hovers above the skeletons of buildings with holes in the windows blacks. Security guards turned away from Bloomberg reporters of the site, and one followed them nearby.
Now, the Blue City destiny may be in the hands of its bondholders. The owners of 661.5 million worth of bonds Blue City to discuss measures to advance the project, a person familiar with the negotiations said. A vote on the liquidation of the project, proposed by the holding company Al Sawadi Investment & Tourism, is pending, the person said.
What happens next depends on the result of a three-year legal battle between the owners and the cyclone in Oman AAJ Holdings Bahrain. AAJ cyclone in September 2007 sued, claiming the acquisition of companies in Bahrain 70 per cent stake Blue City was invalid and the issue should be submitted to the cyclone. After a split decision in the lower courts, the dispute goes to the highest court in the country.
It is too early to say that the project has failed; said Wael Lawati, CEO of Omran, the investment arm of the Ministry of Tourism of the Sultanate of Oman, who say he is not involved in the blue city. He suggested that one possibility would be to shift its marketing emphasis away from wealthy foreigners. Previously, Oman is only intended to purchase five star-plus in places like England and Germany.
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