The mixed-use project, which is located about 100 kilometres northwest of Muscat, will stretch over a 35-square-kilometre site along the Al-Sawadi seafront. To be built over a 15-year period, Blue City will include various residential, commercial, business and tourism-related clusters. The development will also comprise specific health, education and sports zones.

'We want to encourage development beyond Muscat and beyond local investors, while utilising our competitive advantage in the region,' said tourism under-secretary Mohsen bin Khamis al-Balouchi. 'Blue City highlights the confidence in Oman, the political system and the credibility of the economy.'

The new city will house about 200,000 people and create about 50,000 jobs primarily catering to Omani nationals. The first phase, valued at about $1,800 million, will cover an area of 8.5 square kilometres with 4.5 kilometres running along the coast. It comprises five hotels adding an extra 2,000 rooms, a golf community with a 36-hole course and 600 villas, a waterfront residential resort with 1,000 units, a tourist village with souks, apartments and hotels, an aquarium, amphitheatre and associated landscaping and parks. The first phase is scheduled for completion by 2009.

Preparatory earthworks and infrastructure tenders are due to be issued by the end of 2005. Five international consultants have been prequalified for the technical engineering consultancy contract. Bahrain-based ReeMoon is acting as the strategic development manager. Ahmed Janahi Visionscarried out the concept masterplan. Ahmed Janahi Architectsis the lead consultant and architect on the project. Bahrain's Sintegrowill oversee the municipal, utilities and facilities services on the entire development.

Switzerland-based Oppenheimer & Company, which is also providing capital for the project, is arranging the financing. The company said the project's partners, which include unidentified Swiss, German and US companies, had committed $15,000 million in financing. US-investment bank Bear Stearnshas been appointed as placement agents and is looking at a variety of financing options. The first phase is expected to be financed through some form of bond issue with Gulf and European investors the primary target. More details on financing are expected once the construction schedule is in place. The government will finance the development's basic infrastructure.

ASIT, which is 70 per cent owned by foreign investors, is also considering listing the project on the Oman Stock Exchange. Omani capital market laws dictate that the company must have a three-year balance sheet before it can list.

Blue City is the latest in a host of new developments in the sultanate. Dubai International Properties (DIP), a subsidiary of Dubai Holding, signed a memorandum of understanding with the government in April to invest in an estimated $820 million luxury tourist and residential complex covering 2.6 million square metres at Yiti, on the coast south of Muscat. Egypt's Orascom Projects & Touristic Developmenthas been granted approval from the government to develop three resorts, in Salalah, Al-Sawad island and the Muscat area (see Special Report).

The most advanced development is The Wave, being developed by Waterfront Investments, a joint vent