The Saudi monarchs have made the decision to scale back their ambitious NEOM project, according to reports from US business magazine Bloomberg. Originally projected to build 2.4 kilometers of the “Line” by 2030 and accommodate a maximum of 300,000 people, these estimates are now considered optimistic due to rising costs. The project was originally estimated at $500 billion but has since ballooned to three times that amount after only one year of construction.
The majority of funding for the NEOM project comes from Saudi sovereign wealth funds, specifically the Public Investment Fund, which has experienced a significant decline in cash reserves. This financial strain is likely due to budget negotiations for 2024, prompting the royal family to slow down construction significantly. However, this delay could negatively impact Crown Prince Mohammed bin Salman’s reputation as he leads the Vision 2030 program aimed at diversifying the kingdom’s economy away from oil and gas.
NEOM was intended as a major component of Vision 2030 and served as a showcase for the kingdom’s future economic potential. Despite setbacks such as an international construction company withdrawing thousands of workers from the site, the royal family promises to complete other NEOM districts by 2030 such as Sindalah in the Red Sea. The delay in completing NEOM raises concerns about the country’s ability to host major events like the 2029 Asian Winter Games, which were originally planned for NEOM. While some parts of the project are still underway such as Sindalah’s completion, the overall future of NEOM remains uncertain as Saudi Arabia faces economic challenges and resource depletion.