An artist's illustration of the Neom Line city in Saudi Arabia, captured on October 30, 2024, highlights the ambitious yet scaled-back vision of the project. According to three sources who spoke to Reuters, Saudi Arabia has adjusted its grand plans for the Neom gigaproject, focusing on essential elements needed to host global sporting events in the coming decade, as rising costs continue to pose challenges. This decision comes just a day after the unexpected departure of the project's longtime CEO.
Crown Prince Mohammed bin Salman has invested hundreds of billions of dollars into various development projects through the kingdom's PIF sovereign wealth fund. However, the world's leading oil exporter has had to curtail some of its more ambitious initiatives over the past year due to low oil prices and production, which have significantly impacted an economy still heavily dependent on hydrocarbon revenues. "We're already at that stage where projects are being prioritised. So I think we've already reached that," commented Monica Malik, chief economist at ADCB.
Neom, a sprawling Red Sea urban and industrial development nearly the size of Belgium, is set to house nearly nine million people and is central to the prince's Vision 2030 plan, aimed at diversifying the economy beyond oil. Initially announced in 2017, Neom was envisioned as a 26,500-sqkm high-tech development featuring several zones, including industrial and logistics areas. One of the key components of the project is "The Line," a 200-metre-wide series of urban modules sandwiched between two 500-metre-high, 170-km-long mirrored facades that traverse a diverse landscape of desert and mountains.
When the Neom project was first proposed, the estimated cost was $500 billion. However, "The Line" alone was projected to cost over a trillion dollars, prompting a scaling back of the project, according to a consultant familiar with the matter. In 2022, the crown prince announced that the first phase of Neom would cost 1.2 trillion riyals ($319.4 billion), with half coming from the PIF and the other half from the private sector. He also mentioned an initial public offering of Neom in 2024 to help finance the project, though no updates have been provided since.
The Line is designed to feature hanging pathways, gardens, and a stadium, all powered by 100% renewable energy. However, current efforts are concentrated on completing a 2.4km stretch, including a stadium that is slated to host the final match of the 2034 soccer World Cup. Future plans will be assessed after this milestone is achieved, according to one of the three sources with direct knowledge of the matter. Another priority is the completion of Trojena, a planned mountain resort set to host the Asian Winter Games in 2029.
The kingdom's government communications office and Neom have not yet responded to requests for comment. "They are really looking at everything closely now, which makes sense because everyone across different projects was working in silos and there was a lot of overlap," the consultant noted. Project leaders have been under immense pressure to deliver massive developments by the 2030 deadline, with several schemes falling behind schedule or facing delays, according to multiple sources.
Two other sources familiar with the matter indicated that the departure of Nadhmi Al Nasr, the long-time chief executive, was partly due to his inability to meet key objectives. Neom has not publicly addressed the reasons behind Nasr's departure. Additionally, a source revealed that several Neom officials closely associated with the former CEO might also soon leave the company.
Monica Malik noted that earlier management changes suggest the impact on overall investor sentiment is likely to be limited. She added that a more focused and targeted approach, including prioritizing more viable projects or those linked to key events like the Asian Games or the stadium, could be welcomed by investors. "The move to manage costs, extend timeframes, and prioritize projects is being seen as a welcome development," she concluded.
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