Saudi Arabia to drastically scale back NEOM megaproject amid mounting costs and failures

Saudi Arabia is preparing to scale back its flagship NEOM project, a central pillar of Crown Prince Mohammed Bin Salman’s Vision 2030 strategy, as internal reviews point to mounting delays, inflated costs and a growing gap between the project’s ambitions and its achievements.

Sources close to the review told the Financial Times that the NEOM masterplan, once touted as the future of urban life in the Kingdom, will be “significantly downscaled”. Central to the rethink is “The Line”, a 170-kilometre linear city once described by the Crown Prince as a revolution in urban design. It is now expected to be reduced to a more modest version making use of infrastructure already in place.

NEOM was launched in 2017 with promises of smart cities, robot workers and zero-carbon energy. It was also meant to showcase the Crown Prince’s push to diversify Saudi Arabia’s economy beyond oil. But nearly seven years later, much of that vision remains on paper, and even government officials now appear to be tempering expectations.

“It shows that the system has a capacity to adjust its goals,” one person involved in the review said, suggesting that Riyadh is quietly stepping back from the more unrealistic elements of the plan.

The shift in tone comes amid growing financial pressures. Oil prices have remained relatively low and state budgets are being stretched across multiple fronts, including preparations for Expo 2030 and the 2034 World Cup. Riyadh also faces tightening liquidity, prompting the government to refocus spending on more immediate returns.

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Other parts of NEOM are being scaled back too. Trojena — a ski resort in the mountains and the proposed host of the 2029 Asian Winter Games — will no longer hold the event, authorities confirmed. The broader site, roughly the size of Belgium and located along the Red Sea, is being reimagined with a greater focus on data infrastructure and industry.

“There will be a big push for data centres,” one person briefed on the changes explained. “The location near the coast allows for seawater cooling, which is essential for large-scale data operations.” NEOM officials echoed that message, saying the project is being repositioned as a hub for artificial intelligence and digital innovation.

In a statement to the FT, NEOM said it was “phasing and prioritising” projects to align with national goals, adding that it remained committed to “long-term value” and “sustainable economic impact”.

The transformation of NEOM reflects broader questions around Vision 2030. While some progress has been made the more extravagant promises remain elusive. The Public Investment Fund (PIF), which owns NEOM, has poured billions into it, but is now under increasing pressure to deliver visible returns.

Nadhmi Al-Nasr, who led NEOM for years, stepped down unexpectedly in November 2024. His successor, Aiman Al-Mudaifer, launched a full review of the project’s priorities and is believed to be driving the shift towards a more grounded version of the original blueprint.

Prince Mohammed himself has hinted that parts of his plan may be altered. In a speech to the Shura Council last September, he said, “We will not hesitate to cancel or make any radical amendment to any programmes or targets if we find that the public interest so requires.”

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