Saudi Arabia to scale back flagship NEOM project: report

Saudi Arabia’s flagship NEOM development is set to be significantly scaled back and redesigned as a year-long internal review nears completion, the Financial Times reported, citing people briefed on the matter.

According to the report, Saudi Crown Prince Mohammed bin Salman (MBS), who chairs the NEOM project, now envisions a development that is “far smaller” than originally planned, reflecting growing acknowledgement within Riyadh of delays, cost overruns, and flaws in the project’s initial conception and execution.

NEOM, launched in 2017 as part of the kingdom’s economic transformation plans, stretches along the Red Sea coast and covers an area roughly the size of Belgium. Its most ambitious component, The Line, a proposed 170-kilometre linear city, is expected to be radically scaled back and reimagined.

People familiar with the review told the FT that The Line could be redesigned into a more modest project that makes use of infrastructure already built, while NEOM itself may pivot towards becoming a hub for data centres as Saudi Arabia pushes to position itself as a global player in artificial intelligence.

The reassessment comes as Saudi Arabia seeks to manage tighter liquidity after years of heavy spending, with oil prices remaining subdued. Riyadh is also facing major financial commitments linked to preparations for hosting Expo 2030 and the football World Cup in 2034.

NEOM said in a statement to the FT that it was "always looking at how to phase and prioritise" its initiatives to align with national objectives and long-term value creation, adding that the project was advancing in line with strategic priorities and sustainable economic impact.

Several high-profile components of NEOM have already been affected. Riyadh announced over the weekend that the Trojena ski resort, which is to be downsized, will no longer host the Asian Winter Games in 2029. Other planned developments include Oxagon, a coastal industrial and logistics zone.

People briefed on the review said the changes illustrated a growing willingness within the Saudi system to adapt plans to economic realities, rather than persist with projects that are no longer viable at their original scale.

The 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. It is expected to conclude by the end of the first quarter of this year or shortly afterwards, the FT reported.

Neom is owned by Saudi Arabia’s Public Investment Fund (PIF), which manages assets worth close to $1 trillion and is also chaired by MBS. The fund has come under increasing pressure to deliver returns on its vast portfolio of megaprojects as the kingdom recalibrates its spending priorities.

MBS has previously said that projects would be cancelled or radically altered if required by the public interest, signalling that NEOM's downsizing could mark a broader shift in how Saudi Arabia approaches its ambitious development plans.