Saudi Arabia imagined an almost dystopian future based on futuristic ski resorts, 170 km linear skyscrapers and paradise islands for millionaires. Reality has forced the Saudi authorities to wake up from their reverie and face serious cost overruns in the construction of their pharaonic projects and lack of budget to cover them.
He Financial Times uncover in an article that an internal report in which auditors propose cutting the NEOM project in half, reusing what has already been built, but reorienting its objectives and, above all, its budgets. However, this cut is conditioned by the commitments that Riyadh has already adopted, organizing the 2030 World Expo and the 2034 World Cup.
Oil gives no respite: we must cut back. According to Financial Times sources, the audit of the project that is about to conclude leaves no room for maneuver and forces Saudi Crown Prince Mohammed bin Salman to rethink the NEOM project. applying new cuts and changes in construction plans to a “much smaller” project.
The reason for the cut is found in oil priceswho have not recovered from their downward trendseriously damaging the solvency of the nearly $1 trillion Saudi Public Investment Fund that finances NEOM. With a fund that does not grow at the rate it used to and huge investmentsPrince Mohammed has been forced to lower expectations and achieve short-term profitability from what has already been built.
Put your feet on the ground. The NEOM project was born in 2017 as the flagship to transform the Saudi economy, moving from a model focused on the exploitation of natural gas and oil resources to one based on attracting investments, tourism and renewable energy. NEOM consisted of different big-budget projects to build infrastructure in a territory the size of Belgium on the Red Sea coast.
The Line, the crown jewelpromised a linear city 170 kilometers long flanked by two 500-meter-high buildings, without cars or streets, and powered 100% by renewable energy. It was estimated that by 2030 this project would house 1.5 million people, at an approximate cost of 500 billion dollars. In 2024, the first phase of The Line has already suffered an important snip reducing its length 2.4 kilometers away.
The Line was going to be a city, now your data will live. FT sources point out that Riyadh finally admits the initial design flaws, prioritizing what has already been built. Thus, The Line would go from being a futuristic megalopolis to reusing its foundations to become a data center hub to put Saudi Arabia in the AI race.
This shift reflects a change in strategy aimed at achieving more specific goals that provide a short-term return on invested capital, leaving behind the vision of infinite skyscrapers in the desert. Other cuts already announced include $8 billion less from the Public Investment Fund for the five main megaprojects, representing 12.4% of their total valuation.
A ski resort in the desert. The cuts also seriously affect the construction of Trojena, the ski resort futuristic project that was to serve as the venue for the 2029 Asian Winter Games. However, the Asian Olympic Council that organizes this sporting event has announced in a statement “confirming the postponement of the 2029 edition to a later date that will be announced in due course”, and that experts link directly to cuts in its budget.
According to published Bloombergthe project was initially budgeted at around 19 billion dollars and was going to offer 30 km of ski slopes that ran on the roof of the resort itself and different luxury hotels, in a desert area with little snowfall during the year, which added an added challenge to keep the artificial snow necessary for the operation of the station in good condition.
This first postponement sows uncertainty about the future of other competitions to which it has already committed, such as the football stadium that was going to be built. on the roof of The Line.
Image | NEOM
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