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Saudi Arabia’s Neom is perhaps the world’s most controversial architectural project at present, covering 10,200 square miles – almost the size of Belgium – and incorporating renewable energy projects and advanced smart technologies in the middle of the desert. Following several construction delays, rising costs, and criticism over structural aspects of the project, many are wondering whether the Kingdom’s ambitious plan can become a reality.
The crown prince of Saudi Arabia, Mohammed bin Salman, announced plans for Neom in 2017. The mega project includes plans for several cities, resorts, and other developments. The plan was to fund it primarily from Saudi’s Public Investment Fund (PIF), with an initial anticipated cost of around $500 billion – although this has since risen to several trillion. The project aligns with the Saudi Vision 2030 development plan to diversify the economy beyond oil and gas.
The structure is expected to run from the Red Sea in the south and the Gulf of Aqaba in the west of Saudi Arabia. It consists of 10 projects, referred to as regions, with four having been announced – The Line, Oxagon, Trojena, and Sindalah. The Line is expected to be a 170-kilometer linear city with living space for up to nine million people, consisting of two parallel, 500-meter-high, linear skyscrapers standing 200 meters apart and clad with mirrors. Oxagon is designed as an octagon-shaped port city on the Red Sea, to be the logistics hub and the “world’s largest floating structure”. Trojena is a ski resort in the Sarwat Mountains. Finally, Sindalah is a resort on an 840,000-square-metre island in the Red Sea.
While Saudi Arabia is keeping most of the details about Neom’s development under wraps, it is now under construction and is reported to be progressing slowly. The Kingdom has already pumped hundreds of billions of dollars into the project and is facing rising costs and severe delays. This has led to the scaling back of plans for the supercity. One consultant explained, “When the project was first pitched as an idea, costs were $500 billion. However, The Line alone was going to cost over a trillion which was why it’s been scaled back.”
In 2022, bin Salman said that Phase One was projected to cost $319.4 billion, with half coming from the PIF and half from private investment. He hoped to list Neom this year to help fund the project, although this has yet to come to fruition.
In September, the Kingdom began to prioritize certain aspects of the megaproject to ensure that it can hold international events that have been planned for the city and try to attract more private funding. The Line has reportedly been scaled back from 170 km to just a 2.4 km stretch including a stadium, which is expected to host the final match of the 2034 football World Cup. Meanwhile, development at Trojena is being centered around the 2029 Asian Winter Games.
Most of this information comes from third-party reports, as little official information has been shared about project advancements. Neom’s developers have denied that the project is being scaled back to such a great extent, although experts have often suggested the impossibility of developing such a large-scale project in just a few short years and within budget. Others believe that even the initial scope of the project was exaggerated. For example, experts say the Line, which is expected to run from the west and measure 170 km once complete, would crash into mountains in the east if it was truly this long.
In November, Neom’s board of directors announced that Nadhmi Al-Nasr, who had been CEO of the project since 2018, would be replaced by Aiman Al-Mudaifer as acting CEO. A statement from the board read, “As NEOM enters a new phase of delivery, this new leadership will ensure operational continuity, agility, and efficiency to match the overall vision and objectives of the project.” No reason was given for the firing of Al-Nasr, although many believe financial pressures heavily influenced the decision.
Since 2017, there has been increasing financial pressure to advance the project. Saudi Arabia relies heavily on oil prices and needs several more years of consistent oil demand to keep growing its PIF. However, oil prices have been unstable and demand forecasts uncertain, with some seeing a decrease beginning at the end of the decade and others anticipating sustained demand for several decades yet. Saudi Arabia’s fiscal breakeven oil price is estimated to be around $96.20 this year, which is 33 percent higher than the current price of a barrel of Brent crude. This has led Saudi Arabia’s budget deficit to widen, as the Kingdom contends with the delays and rising costs of Neom.
Little official information has been shared about the progress of the megaproject, but many people associated with Neom, as well as technical experts assessing the project via satellite information, suggest that works are advancing slowly, and it is likely to have to be scaled back significantly. Dreams of a smart supercity powered by renewable energy appear to be far off and may never be achieved to the extent that was originally envisioned.
