Saudi Arabia scales back NEOM megacity as costs soar

Saudi Arabia Scales Back NEOM Megacity Project Amid Cost Concerns

Saudi Arabia is significantly downsizing its flagship NEOM development and the ambitious linear city known as The Line as Crown Prince Mohammed bin Salman acknowledges delays, cost overruns, and flaws in the project’s original conception, according to a Financial Times report published this weekend.

The reassessment comes as a year-long internal review nears completion, with people briefed on the matter telling the Financial Times that bin Salman now envisions a development that is “far smaller” than originally planned. The project, which has already consumed approximately $50 billion, may pivot toward becoming a hub for data centers as Saudi Arabia pushes to establish itself as a global player in artificial intelligence.newarab

Asian Winter Games Postponed

In a sign of the challenges facing NEOM, Saudi Arabia and the Olympic Council of Asia announced Saturday that the 2029 Asian Winter Games have been postponed indefinitely. The games were to be held at Trojena, a mountain resort within NEOM planned as the first major outdoor skiing destination in the Arabian Peninsula.abcnews

The Olympic Council of Asia said the games would be rescheduled “to a later date to be announced in due course,” without providing a reason for the delay. Reuters reported that Saudi officials had considered holding back hosting until 2033, and that the Olympic Council of Asia had previously contacted South Korea about potentially replacing NEOM as host.reuters

Strategic Review Under Way

The strategic review was launched last year by NEOM’s new chief executive, Aiman al-Mudaifer, following the departure of longtime CEO Nadhmi al-Nasr in November 2024. Al-Nasr was removed after the Sindalah yachting resort, the only part of NEOM that has opened, held its grand opening three years behind schedule and at three times its original budget.independent

The review is expected to conclude by the end of the first quarter of 2026, and may result in The Line being redesigned into a more modest project that makes use of infrastructure already built. NEOM has also created a new chief of staff division with five senior executives to oversee governance, while staffing levels at the construction site have dropped through layoffs, according to Semafor.semafor

Financial Pressures Mount

The reassessment reflects Saudi Arabia’s need to manage tighter liquidity after years of heavy spending, with oil prices remaining subdued. The kingdom also faces major financial commitments for hosting Expo 2030 and the 2034 FIFA World Cup.newarab

Saudi Arabia’s Public Investment Fund, which owns NEOM and manages assets worth close to $1 trillion, took an $8 billion writedown on its megaprojects in 2024. Speaking at an investment forum in Riyadh last November, one Saudi official acknowledged the government had “spent too much” and was “now running deficits”.linkedin

The Line was originally envisioned as a 170-kilometer city of 500-meter tall mirrored skyscrapers housing 9 million people, operating without roads, cars, or emissions. It remains unclear whether it will continue as part of revised plans in a diminished form.yahoo