Saturday, April 6, 2024
Saudi scales back Neom to a leaner vision of futuristic living in a $1.5T revamp, adjusting ambitions for its desert megacity project.
Saudi Arabia has modified its mid-term goals for the ambitious Neom project, a cornerstone of Crown Prince Mohammed bin Salman’s strategy to shift the nation’s economy away from oil, based on insiders. Initially, the plan was to populate The Line, a futuristic urban development within Neom, with 1.5 million residents by 2030, nestled within unique, mirror-adorned skyscrapers.
However, current projections now estimate that The Line will host under 300,000 people by the same year, as shared by someone close to the developments. Despite previous assertions that The Line would be constructed in phases, with an aim to span a 170-kilometer desert coastline, revised expectations suggest only 2.4 kilometers of the project will be completed by 2030. This scaling back has led to workforce reductions by at least one contractor involved, as indicated in a document obtained by Bloomberg.
Neom, a project valued at $1.5 trillion along the Red Sea, is envisioned by Crown Prince Mohammed as a groundbreaking venture that will redefine the Saudi economy and serve as a proving ground for futuristic technologies. Besides The Line, Neom encompasses an industrial hub, ports, tourist attractions, and is slated to host the 2029 Asian Winter Games in Trojena, a mountain resort.
While The Line’s progress has been scaled down, efforts in other Neom sectors like the luxury tourist haven Sindalah, set for opening this year, continue unabated. The delay in Neom’s 2024 budget approval by the kingdom’s sovereign wealth fund underscores the financial strains on Saudi Arabia’s Vision 2030, an ambitious scheme aimed at economic diversification.
Certain Vision 2030 projects are now expected to extend beyond the original deadline. The Finance Minister, Mohammed Al Jadaan, in December, hinted at the necessity for more time to establish manufacturing capabilities and build a skilled workforce, stating that stretching some project timelines would ultimately benefit the economy.
The Line has intrigued global urban developers and architects with its vision of a linear city spanning a distance greater than that between New York and Philadelphia, all enclosed within towering mirrored structures. Despite hopes of welcoming residents to The Line as early as this year, Neom’s notable achievement to date has been the initiation of a solar and wind power venture aimed at producing green hydrogen, aligning with the kingdom’s objective to lessen its oil dependence.
As the Public Investment Fund explores financial strategies to bolster its reserves, including faster debt issuance and potential equity sales within its holdings, it’s evident that the fund is facing liquidity challenges, with cash reserves hitting a low not seen since 2020.
Crown Prince Mohammed in 2022 outlined that the first phase of Neom would require an investment of 1.2 trillion riyals ($320 billion) by 2030, with half expected from the PIF, over which he presides.
Wednesday, May 1, 2024
Wednesday, May 1, 2024
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