Times of Oman back in action
I'm pleased to report that the Times of Oman is now back in action, free of Google alerts of malware.
Interesting times for Blue City
Rather than Blue City, I should say, Al Madina A'Zarqa, which emphasizes the Omani, and by extension, Arab nature of the development.
The Blue City is an extremely ambitious development. Its project area covers 32 sq kilometres in the neighbourhood of Al Sawadi, on the coast west of Muscat. Scheduled for completion in 15-20 years, its projected total cost is $20 billion. The new city is intended to house 250,000 people, supporting not only a residential and leisure complex but also a whole community with schools, clinics, a hospital and university.
Oxford Business Group, commenting on the Blue City scheme three years ago, stated
According to Anees Issa Al Zadjali, Chairman of Asit,
It took an alert to an article published in The National, an Abu Dhabi newspaper, to decipher that a crisis is brewing for the Blue City Company OneSAOC, after it missed its sales target by almost 50% in May.
The new CEO, Richard Russell, who was appointed as CEO of Blue City Company One on June 1st this year, has come from his position as general manager of QP International, with 'Al Qudra Holding', the joint stock company headquartered in Abu Dhabi. Al Qudrah came into existence in May 2005 with a capital of AED 600 million. It has an impressive lineup of directors and has been involved with various social and sports ventures in UAE as well as unspecified real estate investments. You can glimpse Mr Russell briefly at this YouTube video of QP International at Cityscape Abu Dhabi in 2007.
He replaced Fari Akhlaghi following the missed sales deadline. Professor (or is it Dr?) Akhlaghi is also listed as CEO of Reemoon, a company within AAJ Holdings of Bahrain, with which the Omani partner, Cyclone LLC has been in dispute. Bahrain Tribune, 24th March 2008.
The parent company is actually Ocean Developments, owned 70% by AAJ Holdings of Bahrain, and 30% by Cyclone LLC, the Omani partner. Ocean Developments owns Al Sawadi Investment and Tourism Company (ASIT) and ASIT has a 100% holding in Blue City Company One.
Mr Russell has acted quickly. Within three weeks, he has established agreements with three Omani banks, the Oman International Bank (OIB) BankMuscat and the National Bank of Oman (Oman Observer 23rd June 2008). BankMuscat is offering loans to both nationals and expatriates, while National Bank of Oman's loans are to be offered to all customers.
Mr Russell is being supported by Michael Lawrence who has transferred from Abu Dhabi Investment House, where he was heavily involved in the practical realities of getting projects such as the Bahrain Lagoon and Beirut's Soldiere off the ground.
Mr Russell has been very open about the difficulties that BCC1 is facing, and the effort that is required to turn it round. The National reports him as saying that BCC1
Prior to Mr Russell's arrival, Blue City had attempted to attract buyers from both Qatar and Abu Dhabi.
But the problem remains. A Fitch rating announcement on 4th July explained that in addition to the shortfall on property sales, "Fitch has been advised by the borrower's sales agent, Hamptons International, that the shareholder dispute has already caused difficulties in marketing the project as a result of negative media coverage in the Gulf region, and is of the opinion that, unless resolved quickly, the dispute may hamper BCC1's ability to generate the required level of sales going forward."
In other words, speculation about the legal ownership of the company behind the project, puts the whole development at risk. The Omani partners are contesting the Bahraini partner's ownership of the project.
But where has the media coverage been? News of the legal squabbles between the American financiers was published in April 2007 and news of the Omani courts' judgement in favour of AAJ Holdings in March 2008.
Otherwise, the only 'commentary' that I have read has been on Omani blogs, and I would say that it was recognisably open to bias.
What else could be slowing down interest?
Back in April this year, Prof. Akhlaghi, the then CEO of Blue City Company One revealed,
It ought to be the customers that matter.
The stakeholders, whom I would describe as those with intensive financial involvement with the project, and I would list the rating company, the shareholders, the Omani management, the real estate agent and members of the government along with anyone else who has put money into the scheme, are understandably perturbed not only that this development should collapse as a result of a whispering campaign but also of the risks they face in meeting creditor demands.
The official view is that this is a tremendous opportunity for Oman to position itself beyond the era of oil, eventually employing 200,000 Omanis in diversified service industries.
I'm not altogether impressed by the rampant speculation and, I'm sorry, greed, endemic in investments in the Gulf, but what is the alternative?
More nationals will be able to make a living, possibly even a comfortable living, rather than just having low-income jobs as cleaners, shop and hotel staff, by working in new real estate developments such as Blue City, providing the concept of the integrated city survives as opposed to a purely tourism and leisure complex. There will be no prospects at all without this kind of investment.
More baldly, there's an awful lot of money and effort to lose.
Ask yourself, would that be a waste, or not? What is the least bad choice?
The Blue City is an extremely ambitious development. Its project area covers 32 sq kilometres in the neighbourhood of Al Sawadi, on the coast west of Muscat. Scheduled for completion in 15-20 years, its projected total cost is $20 billion. The new city is intended to house 250,000 people, supporting not only a residential and leisure complex but also a whole community with schools, clinics, a hospital and university.
Oxford Business Group, commenting on the Blue City scheme three years ago, stated
some [are] left wondering how sustainable grand projects such as Blue City will prove to be as magnets for foreign investment and jobs. When projects in Dubai, Abu Dhabi, Bahrain, Kuwait and Qatar reach full completion, Oman's tourism agencies will have to have a carefully thought out strategy in place if they are to attract visitors.Work began late last year under new designers, Foster & Partners.
Oman does, however, have much more going for it than many of its neighbours, given its variety of terrain, the length of coastline and its multiple climates and regions. The hope in Muscat is that Blue City will enable more people to notice these benefits and thus make Oman a major tourism destination of choice.
According to Anees Issa Al Zadjali, Chairman of Asit,
"The Blue City’s first phase is one of the most vital components of the entire project due to its value and the unique key tourism related elements it encompasses. It will accommodate 25,000 residents and local, regional and international visitors and is primarily a residential and tourism development with leisure and retail components."The first phase has been financed by a US$925 million bond, which was arranged by the investment bank Bear Stearns, before its collapse in March this year. It doesn't help that the reason the bank had to fold and be taken over by JPMorgan Chase, was that two of its members in particular had been raising funds on the risky subprime market in the USA, which failed during the latter part of 2007.
It took an alert to an article published in The National, an Abu Dhabi newspaper, to decipher that a crisis is brewing for the Blue City Company OneSAOC, after it missed its sales target by almost 50% in May.
The new CEO, Richard Russell, who was appointed as CEO of Blue City Company One on June 1st this year, has come from his position as general manager of QP International, with 'Al Qudra Holding', the joint stock company headquartered in Abu Dhabi. Al Qudrah came into existence in May 2005 with a capital of AED 600 million. It has an impressive lineup of directors and has been involved with various social and sports ventures in UAE as well as unspecified real estate investments. You can glimpse Mr Russell briefly at this YouTube video of QP International at Cityscape Abu Dhabi in 2007.
He replaced Fari Akhlaghi following the missed sales deadline. Professor (or is it Dr?) Akhlaghi is also listed as CEO of Reemoon, a company within AAJ Holdings of Bahrain, with which the Omani partner, Cyclone LLC has been in dispute. Bahrain Tribune, 24th March 2008.
The parent company is actually Ocean Developments, owned 70% by AAJ Holdings of Bahrain, and 30% by Cyclone LLC, the Omani partner. Ocean Developments owns Al Sawadi Investment and Tourism Company (ASIT) and ASIT has a 100% holding in Blue City Company One.
Mr Russell has acted quickly. Within three weeks, he has established agreements with three Omani banks, the Oman International Bank (OIB) BankMuscat and the National Bank of Oman (Oman Observer 23rd June 2008). BankMuscat is offering loans to both nationals and expatriates, while National Bank of Oman's loans are to be offered to all customers.
Mr Russell is being supported by Michael Lawrence who has transferred from Abu Dhabi Investment House, where he was heavily involved in the practical realities of getting projects such as the Bahrain Lagoon and Beirut's Soldiere off the ground.
Mr Russell has been very open about the difficulties that BCC1 is facing, and the effort that is required to turn it round. The National reports him as saying that BCC1
was required to book $101m in revenue by Aug 7 [2008]. So far, the company has recorded $28m, which means that another $63m, or the initial payments from about 1,000 sales, is still needed. “It’s a tight deadline, but we’re confident we can make it.”Mr Russell has already pulled in an extra 2,000 labourers and construction is proceeding 24/7. Villas are being offered at a discounted cost to attract buyers.
Prior to Mr Russell's arrival, Blue City had attempted to attract buyers from both Qatar and Abu Dhabi.
But the problem remains. A Fitch rating announcement on 4th July explained that in addition to the shortfall on property sales, "Fitch has been advised by the borrower's sales agent, Hamptons International, that the shareholder dispute has already caused difficulties in marketing the project as a result of negative media coverage in the Gulf region, and is of the opinion that, unless resolved quickly, the dispute may hamper BCC1's ability to generate the required level of sales going forward."
In other words, speculation about the legal ownership of the company behind the project, puts the whole development at risk. The Omani partners are contesting the Bahraini partner's ownership of the project.
But where has the media coverage been? News of the legal squabbles between the American financiers was published in April 2007 and news of the Omani courts' judgement in favour of AAJ Holdings in March 2008.
Otherwise, the only 'commentary' that I have read has been on Omani blogs, and I would say that it was recognisably open to bias.
What else could be slowing down interest?
Back in April this year, Prof. Akhlaghi, the then CEO of Blue City Company One revealed,
“BCC1 SAOC is an independently financed legal entity established to develop Al Madina A’Zarqa, operating independently of the shareholders.I guess this means that if you buy a property at Blue City, payment to creditors is prioritised rather than paying for your house to be built.
“In other words, when one purchases a property in Al Madina A’Zarqa, payments are directed to bank accounts held in the name of Blue City Company One and supervised by the bondholders’ representative bank, and not to the shareholders of the company,”
It ought to be the customers that matter.
The stakeholders, whom I would describe as those with intensive financial involvement with the project, and I would list the rating company, the shareholders, the Omani management, the real estate agent and members of the government along with anyone else who has put money into the scheme, are understandably perturbed not only that this development should collapse as a result of a whispering campaign but also of the risks they face in meeting creditor demands.
The official view is that this is a tremendous opportunity for Oman to position itself beyond the era of oil, eventually employing 200,000 Omanis in diversified service industries.
I'm not altogether impressed by the rampant speculation and, I'm sorry, greed, endemic in investments in the Gulf, but what is the alternative?
More nationals will be able to make a living, possibly even a comfortable living, rather than just having low-income jobs as cleaners, shop and hotel staff, by working in new real estate developments such as Blue City, providing the concept of the integrated city survives as opposed to a purely tourism and leisure complex. There will be no prospects at all without this kind of investment.
More baldly, there's an awful lot of money and effort to lose.
Ask yourself, would that be a waste, or not? What is the least bad choice?