- edit : according to latest comment : Blue City officially closed down the project end March 2011. -
This project is so huge that it has been divided in 10 phases. The phase1 (only 5,5km²) should be finished only in 2013
Some people already consider the purpose of "Blue city" is to become the new capital of Oman... I think I will come back in Oman in 20 years just to see how the country has evolved and if Muscat is still the capital ;)
more info : official website, wikipedia...