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High profile luxury resort in Bahrain cancelled amid turmoil

Sama Dubai, owned by the ruler of the emirate, has pulled the plug and cancelled its deal with South Africa's Murray & Roberts and Bahrain's Nass Corporation to build the Salam resort.

The firm did not give a reason for the project being cancelled but it is widely assumed that it is connected with the global economic downturn which has seen other high profile projects in the region delayed or cancelled.

It is the latest in a string of projects to suffer and second Murray & Roberts has lost in as many months. In December its key Trump Towers Dubai building project was scrapped.

It is also a sign that the economic woes which have put a severe halt on development in Dubai are now spreading to other areas of the Gulf. Bahrain until now has not been as badly hit, but the small kingdom island is beginning to feel the effects of the crisis as projects financed by banks and developers from the rest of the region are being delayed.

Sama Dubai said in November it was considering job cuts and reviewing its projects. And Dubai developer Deyaar has put all its unsold projects on hold.

'We believe that it is wrong to deliver units which have not been promised to the customer,' said chief executive Markus Giebel, adding that the company was still on track to make a profit.

He said Deyaar will deliver five residential and commercial projects in Dubai in 2009 and revealed that it has around 22 projects in the emirate under construction.

He also revealed that Deyaar is in negotiations with a Saudi firm to develop a master community in Jeddah and the company is also looking at potential in Turkey and North Africa.