Saudi Arabia’s ambitious $500 billion mega-city project, Neom, has been in the spotlight recently as it faced challenges and setbacks. The grand opening of the first phase, Sindalah, was marred by delays and cost overruns, with the initial $1.3 billion budget skyrocketing to nearly $4 billion. The absence of Crown Prince Mohammed bin Salman, the project’s main architect, at the event raised eyebrows. Weeks later, Neom’s CEO, Nadhmi al-Nasr, was replaced, adding to the uncertainty surrounding the project.
Since its launch in 2017, Neom has burned through over $50 billion, but its ambitious plans, such as a floating business district, a desert ski resort, and a 170-kilometer-long linear city, have struggled to materialize. Reports from The Wall Street Journal revealed financial manipulation within Neom’s leadership, with executives allegedly using inflated financial projections to justify escalating costs. An internal audit uncovered “deliberate manipulation” of figures by certain members of management.
A draft board presentation from 2023 estimated that completing Neom by 2080 would require a staggering $8.8 trillion, more than 25 times Saudi Arabia’s annual budget. Even the first phase, scheduled until 2035, is expected to cost $370 billion. The project was envisioned to revolutionize urban living, with Crown Prince Salman comparing it to the Egyptian pyramids. The Line, a futuristic city stretching 170 kilometers across the desert, faced engineering challenges and rising costs, leading to compromises in its design.
The ski resort, Trojena, also saw costs spiral out of control, with revenue projections allegedly inflated to balance the books. Despite Saudi officials’ assurances that Neom will attract private investment, foreign direct investment in the kingdom remains below targets. Potential investors are hesitant due to concerns about the project’s scale, complexity, and the regulatory environment in Saudi Arabia. The International Monetary Fund has called for greater transparency on project spending.
As Neom grapples with these challenges, it remains to be seen if the mega-city project will live up to its lofty ambitions. The road ahead is fraught with obstacles, but with strategic planning and investor confidence, Neom could still emerge as a groundbreaking development in the region.
