Blue City, Oman: when a tower is not enough

Liquid Real Estate, Euromoney magazine, December 2008

In the Gulf, it’s never quite enough to build a tower or even a complex. If you really want to make a splash, you’ve got to build a city.

We tend to associate these vast ideas with the United Arab Emirates and Saudi Arabia, but something equally staggering in scale is taking place in Oman, on a natural peninsula about an hour up the cost from Muscat. This is Al Madina A’Zarqa (literally, The Blue City), taking shape on 16 kilometres of shoreline by the Gulf of Oman. When completed, this will be a 32 square kilometre city, home to 200,000 people. Some are even envisaging it as a future Omani commercial capital.

It’s all part of His Majesty Sultan Qaboos bin Said’s mission to diversify Oman from being all about fossil fuels to becoming a diversified economy. This is the Vision 2020 project, and at its heart is a drive towards tourism, although Al Madina A’Zarqa is ultimately intended to be much more than a tourist resort. It will have civic and education clusters, as well as a utilities belt on the south of the city, and seeks to grow on the back of six economic drivers: tourism, entertainment, education, medicine and healthcare, sports and wellness, and trade.

Richard Russell is the chief executive of Blue City Company 1, the special purpose company tasked to deliver phase one of the project – described as the town within the city, dominated by high end residential properties and the tourism sections (plus the obligatory gold course). An 18-year veteran of Gulf real estate, he has previously been involved in several of the more dramatic property developments in the region, among them Saadiyat Island in Abu Dhabi, the Palm Jumeirah, and Qatar’s Pearl Development.

One of the first things he highlights about Oman is its unique character relative to the rest of the region. “It’s pretty darned different,” he says. (Two decades outside of North America haven’t dimmed an engaging affinity for the idiom “pretty darned”). “The natural beauty: we have mountains here. It has an untapped tourist market which is in its infancy while some others have dramatically increased over the last few years.”

It’s true that Oman has a lot going for it physically: residents of the Middle East tend to refer to it and Jordan as the two most beautiful countries in the region, and one doesn’t have to drive far from Muscat to be in the middle of the beautiful Al Hajar mountains which simply have no equivalent anywhere else in the Middle East.  “Oman has a lot to offer,” Russell says. “It’s at the beginning of its cycle and the government is taking some measured approaches to development, not the free-for-all I see in other places.”

It’s also friendly to foreign involvement, although when asked about recent changes to freehold rights for foreigners, Russell says Oman has actually long been a leader in this regard. “The job of getting the message out can certainly be improved, but Oman has been way ahead of its regional neighbours as far as getting the legislation in place for real estate development,” he says. “It’s extremely transparent, its freehold laws and inheritance laws are very straightforward. In fact for inheritance, you essentially adopt the laws of your own country, which is pretty darned amazing.”

Although Russell’s mandate on phase one will be on the tourism side – a national priority given the paucity of hotel accommodation in Oman – he is quick to highlight Blue City’s broader aspirations. “It also brings in other opportunities in economics, healthcare, trade, commerce… it’s destined to be the commercial capital.” He hopes it will have a strong educational element too. “A very significant proportion of the population in this country is below the age of 20. An educated population is a very valuable resource for the country. They are now exported to other Gulf states, but they could be brought back to improve their home country. So clearly the development has significant educational components: for example universities, vocational schools.” But it will start with the tourism side.

Russell says the first phase is on track for completion by December 2012. It is under construction now, but in what Russell calls the horizontal work – the infrastructure – with the vertical work to start in early 2009. And for the other phases? “We are looking at that right now. You can’t build one piece of puzzle without knowing what the overall puzzle is.”