The beginning was for NEOM to accommodate 1.5 million residents by 2030 (Reuters)

Bloomberg reports that Saudi Arabia's ambitious NEOM project — originally envisioned as a transformative endeavor within Vision 2030 — is undergoing a major reassessment.

The agency noted that the project - which was initially announced to be a future city preparing to accommodate 1.5 million residents by 2030 - has undergone recent developments that indicate a significant decline in ambitions.

Projections now indicate that fewer than 300,000 people may live in the expected city in the same time frame, according to the agency.

Revised forecasts

In the heart of NEOM, the “The Line” project is located, an “imaginative urban” concept that aims to extend 170 kilometers along the Red Sea coast.

However, Bloomberg explains, recent revisions paint a very different picture, with projections indicating that only part - only 2.4 kilometers - will be completed by 2030.

Expectations indicate that less than 300,000 individuals may inhabit the expected city of NEOM in the same observed time frame (Al Jazeera)

This significant downsizing has reverberated throughout the project, prompting at least one contractor so far to begin laying off workers it employs on site, according to Bloomberg.

Financial pressure

Delays are looming in many projects related to NEOM, prompting Finance Minister Mohammed Al-Jadaan to hint that a longer period is needed “to build factories and build sufficient human resources,” stressing that “delaying some projects - or rather extending them - will serve the economy.”

Bloomberg quoted - from sources familiar with the matter - that reducing “The Line” comes at a time when the Kingdom’s sovereign wealth fund has not yet approved NEOM’s budget for the year 2024.

Is NEOM's vision affected?

Bloomberg confirms that in the midst of recalibrating expectations, NEOM's comprehensive vision for economic transformation and technological innovation stands at a crossroads. While the "The Line" project witnessed delays from what was planned, officials maintained their general goals for the project, according to what people familiar with the matter told Bloomberg.

However, other aspects of NEOM continue to advance, as Sindalah, a luxury tourist destination located on an island in the Red Sea, is preparing to open its doors this year. However, the ambitions raise questions about NEOM's ability to achieve its goals within the expected timeline.

Al-Jadaan hinted that a longer period is needed to build factories and build sufficient human resources (French)

Saudi Crown Prince Mohammed bin Salman’s vision for “The Line” project captured the global imagination, with stunning displays depicting the cityscape inside towering mirrored skyscrapers.

However, NEOM's most notable success story so far lies in the field of renewable energy. An ambitious $8 billion initiative is underway to create solar and wind farms dedicated to producing green hydrogen. This confirms Saudi Arabia’s ambition to emerge as a leading country in sustainable energy production, in line with broader global efforts towards environmental stewardship and carbon abandonment.

Strategic reorganization

While the Public Investment Fund seeks to bolster financial reserves, the Fund has explored other options to raise money - including accelerating debt issuances and organizing offers to sell stakes in its portfolio companies.

The challenges facing NEOM underscore the multifaceted nature of economic diversification efforts in the Kingdom of Saudi Arabia.

In 2022, Crown Prince Mohammed bin Salman said the first phase of NEOM is expected to cost 1.2 trillion riyals ($320 billion) by 2030. Half of that is expected to come from the Public Investment Fund, which he chairs.

Source: Bloomberg