More cash flow woes for Blue City? Reports that planned Public Buildings have been shelved.

Observant readers will have noticed there have been no press releases from Blue City (aka Al Madina A'Zarqa) lately about how basically everything is on track. Things can't be going well when there are not even stories to report of meaningless progress milestones, contracts signed, or glittering awards won for things not yet built. Lets see what the next "Quarterly News Bulletin" says, expected this month, unless Issue No. 2 of this riveting mag is delayed too.

Meanwhile, the Dragon’s sources in BCC1 have informed Muscat Confidential that construction of eight of the planned Public Amenities buildings in Phase One have been “indefinitely suspended”, whatever that means.

Fortunately our sources were clearly undeterred by an earlier note (reported here) from BCC1 top management threatening their staff with disciplinary action if they shared news with the media…

Buildings affected by the cash-saving axe are (apparently): A Mosque, Police Station, City Hall, Medical Centre, Post Office, Nursery and Kindergarten, Primary School, and Fire Station.

Of course, the original plan had a 27 hole golf course, already cut back to 18 holes, and BCC1 management were even considering building only a 9 hole course until it was pointed out that no-one would come to play at a 9 hole course in the middle of nowhere. . .

As noted in some of the PR releases from Blue City,

Phase one, a 2.5 sq km development, comprises around 5000 apartments and 500 villas. Initial sales began in December 2007, with one-bedroom apartments priced at about $179,400 and two-bedroom apartments at around $291,200. Three-bedroom villas are being sold from around $535,600.

The project is set to include three five-star hotels, an 18-hole golf course, shops, schools, mosques and police stations. Slated for completion in 2012, the phase one site is expected to create around 7000 jobs.

Or to quote from His Highness Sayyid Haitham Bin Tariq Al Said, as reported in OCIPED's newsletter in 2007

“Al Madina A’Zarqa is planned to become a model for a lifestyle that adapts to the surrounding environment. The project has not excluded traditional Omani architectural design and construction; on the contrary, it is inspired by architectural elements to be found in the local environment. Al Madina A´Zarqa is planned to be a model for those seeking relaxation in an integrated community that meets the need of daily life, including family and work requirements”.

The problem with public amenity buildings is, of course, that while they might meet the integrated needs of residents daily lives, they cost good money to build while providing didly-squat in terms of sales income to the developers. So presumeably the residents daily lives will be a little less complicated and a little more relaxed in Blue City. I mean, really, who needs a lousy post office?

I hope those buying the Blue City's apartments and villas (actually, relative to other Oman developments, I must say they are very competitively priced) looked very carefully at their contracts to check exactly what hard guarantees they really have with regard to general facilities and other public amenities. Perhaps this is why they have not been cancelled but merely 'indefinitely suspended'...?

This was all expected. Those in the know were long predicting - even before the global crisis and GCC's regional meltdown in the off-plan speculative real estate model – that the grandiose plans for Blue City would be forced to revert to a standard integrated tourism development complex: A few hotels, apartments and villas; maybe a marina and some shops and restaurants, a golf course and Spa, and some beaches to sunbathe on. Throw in some diving and fishing/dolphin watching, and you can imagine a 'Shangri La by the Daymaniats' experience quite easily, and very nice for a week or two's holiday I'm sure it will eventually be.

The Government are also, it seems, still pressing ahead with their side of the deal, with a tender for the overhead powerlines that will carry power to Blue City's town issued last week.

But the whole stand alone economic model; all the "it's a new city for 200,000 people we're building, the future commercial capital of Oman, blah blah blah" crap, so hyped before the construction was delayed and contractual sales targets missed, always relied on massive internal economies of scale – Lots of businesses and residences with local staff who would need schools and universities for their kids, whose teachers would need a hospital, whose nurses would go out to restaurants, etc etc. So cut backs might indicate the real future is not so grand, at least unless the Government steps in and forces some Ministries to move up there.

It didn’t help either when the 'Medical City' planned to be built next door, and promising the usual Dubai-esque array of yet more universities, hospitals, schools, etc etc etc, was cancelled in October last year.

Sue Hutton of NewsBriefsOman pointed out in March this
recent article from UK based MoneyWeek on why not to buy property in Oman:

Sadly, Oman's property boom is likely to be little more than a mirage – and one that sounds remarkably like Dubai's. The developments are huge – the first will consist of 4,000 homes – with tiny properties "pressed closely together on modest plots". These shoe-box homes don't come cheap. An 82 sq m one-bedroom flat will set you back £210,000. But at least it's in a convenient location – right next door to Muscat airport.
Pundits argue that Oman is a better bet than Dubai because it's pursuing a steadier process of development. Perhaps they haven't noticed that it's currently building an entirely new town in the desert northwest of Muscat. The Blue City will have accommodation for 200,000 people when it is completed in 2019. What's unclear is where these 200,000 people will come from.

...

Another fear is Oman's track record. Last October thousands of tourists found their holiday plans cancelled when Oman announced that the Gulf Co-operation Council Summit would take place from 26-30 December. Every room in six of its leading hotels was requisitioned for the conference, causing thousands of bookings to be cancelled. A country that tolerates foreign investment rather than welcoming it isn't a reassuring prospect for anyone thinking of sinking thousands into off-plan properties. In short, we suspect that if you're patient, you'll find better opportunities closer to home long before Oman is ever worth buying into.

Hmmm. A little harsh at the end I thought.

Perhaps this is why Blue City changed their logo to a stylised plug hole?