The project in the Hippo Creek Resort initiative would have resulted in an investment of US$50 million, the largest in 10 years.
The Hippo Creek Resort is an investment vehicle formed early this year by a consortium of local investors and a European-based partner. Tourism guru Mr Emmanuel Fundira is the co-ordinator.
The consortium had secured permission to develop a tourism resort on the area around Lake Chivero, which also supplies water to Harare and Norton.
Herald Business understands the multimillion-dollar project has stalled after some of the people resettled under the land reform programme occupied part of the land.
Government embarked on the land reform programme in 1999 to address the land ownership imbalance created under the Land Apportionment Act, among other draconian laws of the period.
The then Ministry of Environment, Tourism and Natural Resources designated the disputed area as a Tourism Development Zone.
But Permanent Secretary for Land and Land Resettlement Mrs Sofia Chakwi professed ignorance of the issue and asked for written questions to carry out an investigation, after which the minister would comment.
This logjam also touched off a dispute with the Zvimba Rural District Council, but sources said only the intervention by the Ministry of Lands and Land Resettlement could bring the raging storm to an end.
Mr Fundira, the project co-ordinator, said Government had pledged to look into the matter.
"The logjam has to do with certificates of occupancy as various parties are claiming ownership of part of the land earlier designated for tourism development.
"The piece of land covers an area of 600 hectares of which 50 percent is secured in partnership with Kuimba Shiri and a few other players," said Mr Fundira.
It was envisaged the partnership with Kuimba Shiri, a bird sanctuary, would make the tourism products under the tourism scheme more adventurous.
The Hippo Creek project was to be rolled out in phases amid revelations that the US$6 million required for the initial phase was already available. The remaining US$44 million would be available in subsequent phases.
Mr Fundira said the investment was expected to create more than 500 direct jobs, but pointed out the potential benefits were more than the stated figures.
Under the project, Hippo Creek intended to put up accommodation facilities, water sports such as skiing, jet sailing, houseboat and boat cruising. The investors also planned to construct an upmarket service centre.
A speedy resolution of the matter would allow the country to benefit from investment and also enable resettled farmers to put land to productive use.
Zimbabwe needs huge amounts of investment to claw back on ground lost during a decade of economic instability, which scared away investors. Tourism is regarded as a "quick win" sector for economic reconstruction.