Identifier
Created
Classification
Origin
08MUSCAT188
2008-03-03 12:51:00
CONFIDENTIAL
Embassy Muscat
Cable title:  

OMANI TOURISM PROJECTS GAIN MOMENTUM

Tags:  ECON EINV PREL MU 
pdf how-to read a cable
VZCZCXYZ0191
RR RUEHWEB

DE RUEHMS #0188/01 0631251
ZNY CCCCC ZZH
R 031251Z MAR 08
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC 9342
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L MUSCAT 000188 

SIPDIS

SIPDIS

STATE FOR NEA/ARP, EEB/CBA
COMMERCE FOR ITA THOFFMAN

E.O. 12958: DECL: 03/02/2018
TAGS: ECON EINV PREL MU
SUBJECT: OMANI TOURISM PROJECTS GAIN MOMENTUM


Classified By: Ambassador Gary A. Grappo for Reasons 1.4 (b and d)

-------
Summary
-------

C O N F I D E N T I A L MUSCAT 000188

SIPDIS

SIPDIS

STATE FOR NEA/ARP, EEB/CBA
COMMERCE FOR ITA THOFFMAN

E.O. 12958: DECL: 03/02/2018
TAGS: ECON EINV PREL MU
SUBJECT: OMANI TOURISM PROJECTS GAIN MOMENTUM


Classified By: Ambassador Gary A. Grappo for Reasons 1.4 (b and d)

--------------
Summary
--------------


1. (C) OMRAN, the government's tourism investment company,
continues to play a crucial role in the planning of several
prominent, integrated resort complexes throughout the
Sultanate. While most projects are located in Muscat,
OMRAN's efforts will bring the potential economic benefits of
the tourism industry to more isolated areas of Oman. Many of
the projects, especially those based on residential freehold
development, have generated significant buzz; however,
feasibility questions surround the hyped Blue City project.
End Summary.

--------------
OMRAN Takes the Lead
--------------


2. (C) On February 26, Econoff met with OMRAN Chief Financial
Officer Prakash Gabra to review the progress of Oman's
tourism development initiatives. Headlining OMRAN's projects
is the development of a convention center complex in Muscat.
Revised plans include the creation of a 4,000-seat venue,
four hotels with 1,000 rooms each, 70,000 square meters of
office space, and a 150,000 square meter mall. Completion of
this project is scheduled for 2012. In addition, OMRAN will
develop a prime strip of beachfront in Muscat, which will
include hotels, commercial outlets, and residential units, as
well as a boutique hotel in Muscat's Bousher district, close
to the mountains.


3. (C) Outside of Muscat, OMRAN plans to invest $2 billion in
the construction of a three-hotel, two-golf course resort
complex at Duqm, currently a lightly populated coastal area
half-way between Muscat and Salalah. The complex, which is
scheduled to open in 2010, will serve as a contrast to the
government's industrial plans for Duqm, which include a
drydock, refinery, and airport. To capitalize on Oman's
natural beauty, OMRAN will construct a 35 million rial (USD
90 million) resort on top of Jebel al-Akhdar, one of Oman's
highest peaks. Plans call for a 100-room resort to be
managed by an Indonesian company, with published room rates
starting at $500 per night. Rounding out OMRAN's efforts is

the construction of a small hotel on Masirah Island, home to
some of Oman's turtle nesting grounds.

--------------
Joint Ventures for Tourism
--------------


4. (C) Complementing these investments is OMRAN's involvement
as a 30% equity partner in several planned integrated tourism
complexes just outside of Muscat. Gabra stated that OMRAN
has partnered with Sama Dubai and Egyptian-based ORASCOM on
developing resort complexes at Yiti and Sifah, respectively.
Residential units at Sifah, according to Gabra, are 100% sold
out, while units at the Yiti complex will soon be released
for sale. Additionally, OMRAN has entered into a joint
venture with Saraya of Jordan to construct a resort planned
for Qantab. In Salalah, the government is teaming up with
ORASCOM on the development of the Salalah Beach Resort, which
will include five hotels, two golf courses, and 6,000
residential units, which have also been sold out. The CFO
estimates that 50% of the buyers in these projects are Omani,
with 40% of those being investors.


5. (C) In review of other tourism projects not involving
OMRAN, Gabra stated that "The Wave," a joint venture between
the Muscat Municipality and Majid al-Futtaim of Dubai, was
proceeding amidst brisk sales. He also believed that the $1
billion "Omagine" project, a one million square meter
entertainment/residential complex being developed by U.S.
promoter Frank Drohan, would also move forward under a
build-lease agreement with the government.

--------------
Concern about Blue City
--------------


6. (C) Gabra expressed concern, however, over the development
of "Blue City," a proposed $15 billion integrated tourism
complex one hour northwest of Muscat. Remarking that the
interest rate on the $1 billion bond issued for construction
of the first phase was "very high," the CFO questioned the
viability of the highly publicized project as a whole. He
added the secondary sales market for Blue City was very soft,
with 25 yet-to-be built units currently looking for buyers.
In the end, however, Gabra predicted that the government
would step in should the project falter significantly.


7. (C) In a subsequent conversation with Econoff, Oman Arab
Bank Deputy General Manager Michel LeFur shared similar
concerns regarding the feasibility of Blue City,
characterizing its future as "a big question mark." He
agreed with Gabra's positive assessment of the Wave and the
Yiti projects, given the close proximity of the former to
Muscat, and the backing of the Maktoum family for the latter.
As for Sifah, he was more cautious on its outlook based on
its distance from the capital, but nevertheless predicted
that outside investment would buoy the development. In
general, however, he found that considerable market hype had
inflated property values, and took with a "grain of salt"
claims by property developers that their projects were
already sold out.
GRAPPO