NEOM Project: Costs and Re-Evaluation

Saudi Arabia is reassessing its ambitious $500 billion NEOM megacity project, including its centerpiece, "The Line." This strategic review, confirmed by NEOM, raises questions about the project's escalating costs and complexity. The Public Investment Fund (PIF), which backs NEOM, is evaluating the linear city's feasibility, financing, and economic impact. This reassessment coincides with reports of budget constraints and operational slowdowns across the kingdom's Vision 2030 infrastructure program.

Reports indicate significant workforce reductions and relocations are underway at NEOM. Over 1,000 employees are being moved from the remote construction site to Riyadh, reversing a previous policy. This move is expected to result in a pay cut for employees as they lose on-site benefits. Furthermore, the scope and timeline of "The Line" are being scaled back, with construction frozen on large sections and a 35% reduction in active construction workers since April 2025.

Financial pressures are impacting NEOM's ambitious timelines, with delayed payments to vendors and reallocation of capital from energy-sector projects. The estimated final cost of NEOM has ballooned to $8.8 trillion, a dramatic increase from the original $500 billion projection. The project's "end-state" is now expected by 2080, with the first phase, costing $370 billion, potentially completed by 2035.

Despite these challenges, Saudi authorities maintain that "The Line" will eventually span 100 kilometers and remain a key part of the NEOM vision. However, the project's evolution may not fully align with the initial futuristic blueprint, potentially becoming a more gradual and costly experiment in urban design. The kingdom aims to attract private investment to complete the futuristic city, which is a key pillar of its plan to diversify away from oil.