HONG KONG (Bloomberg) -- Daewoo Shipbuilding & Marine Engineering Co. signed an agreement with the government of Oman to develop tourism in Duqm, the South Korean company’s first foray into real estate.

The venture will develop the port city about 450 kilometers (280 miles) south of Muscat into a tourist and business area, Daewoo Shipbuilding said in an e-mailed statement on Wednesday. The value of the project will be decided later, the Seoul-based company said, without giving details of the development.
Daewoo Shipbuilding, the world’s third-biggest shipyard, is turning to new businesses to benefit from increased spending in the Middle East. Economies in the Gulf region will expand 9.2 percent this year as oil revenue spurs spending on airports, power plants and business parks, according to Morgan Stanley.
The Oman project may be worth about $20 billion, the Korean- language Internet newspaper Money Today reported on Wednesday, without saying where it got the information.
Gulf states, including Saudi Arabia and the United Arab Emirates, plan to spend a combined $1.1 trillion to develop their economies, Qatar Finance Minister Yousuf Hussain Kamal said. That may help South Korean contractors win record orders for a third year in 2008.
Condominiums, hotels
Daewoo Shipbuilding may develop Duqm into a marine resort with condominiums and hotels as well as building homes for people working in the city, which will become an industrial and tourist area by 2020, the shipyard said. The government also plans to build a refinery complex, a crude-oil export terminal and a new airport and expand port facilities in Duqm.
The South Korean shipbuilder in 2006 signed an agreement to build and operate a ship-repair yard in Oman, which will be the biggest in the Middle East.
Other South Korean companies are also moving into Oman. LG International Corp., a unit of LG Corp., said it signed a preliminary agreement with Korea Southern Power Co. and state- owned Oman Oil Co. to bid for a $2 billion coal-fired power project in the Middle East nation.
South Korean contractors have received $7.5 billion in orders from the Middle East this year, 16 percent more than a year earlier, according to the International Contractors Association of Korea. Overseas contracts may reach $40 billion this year, the Ministry of Land, Transport and Maritime Affairs said.
Daewoo Shipbuilding rose 0.8 percent to 46,650 won at the close of trading in Seoul. The stock has climbed 19 percent in the past year, outpacing a 17 percent gain for South Korea’s Kospi index.