Blue City, Oman’s largest property development, appears to be facing serious challenges after an insurance company announced it had increased its loss provisions to cover the project’s possible collapse.
Axis Capital, an insurer and reinsurer, said in its fourth-quarter earnings last week that it had increased its provisions for the project to an extent the company believes “will be sufficient to bring finality to our involvement”.
A subsidiary of Axis provided a 100 per cent credit insurance policy for $399m (Dh1.46 billion) worth of bonds that Blue City issued to finance construction. A total of $925m worth of bonds were issued.
The immense Blue City project was Oman’s answer to the booming property markets of Dubai and elsewhere in the Gulf. By far the largest master development launched in the country, original plans show a 32-square-kilometre city built over 20 years at a cost of an estimated $20bn.