Saudi Arabia downsizes ambitious Red Sea megaproject NEOM

Saudi Arabia’s flagship NEOM development is set to be significantly scaled back and redesigned as a year-long internal review nears completion, Financial Times reports.

Saudi Crown Prince Mohammed bin Salman, who chairs the NEOM project, now envisions a development “far smaller” than originally planned, reflecting growing acknowledgment within Riyadh of delays, cost overruns, and shortcomings in the project’s initial conception and execution.

Launched in 2017 as part of Saudi Arabia’s economic transformation strategy, NEOM spans the Red Sea coast and covers an area roughly the size of Belgium. Its most ambitious element, The Line—a proposed 170-kilometre linear city—is expected to be radically scaled back and reimagined.

Sources told the FT that The Line could be redesigned into a more modest project utilizing infrastructure already constructed, while NEOM itself may pivot toward becoming a hub for data centres, as Saudi Arabia seeks to position itself as a global player in artificial intelligence.

The reassessment comes amid tighter liquidity pressures after years of heavy spending, with oil prices remaining subdued. Riyadh also faces major financial commitments related to preparations for Expo 2030 and the 2034 FIFA World Cup.

NEOM said in a statement to the FT that it was “always looking at how to phase and prioritise” initiatives to align with national objectives and long-term value creation, adding that the project is 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 will be downsized, will no longer host the 2029 Asian Winter Games. Other planned developments include Oxagon, a coastal industrial and logistics zone.

Sources familiar with the review said the changes signal 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 CEO, Aiman al-Mudaifer, following the departure of longtime CEO Nadhmi al-Nasr in November 2024, and is expected to conclude by the end of the first quarter of 2026.

NEOM is owned by Saudi Arabia’s Public Investment Fund, which manages nearly $1 trillion in assets and is also chaired by Crown Prince Mohammed bin Salman. The fund faces mounting pressure to deliver returns on its megaprojects as the kingdom recalibrates its spending priorities. MBS has previously stated that projects would be canceled or radically altered if required by the public interest, signaling that NEOM’s downsizing may reflect a broader shift in Saudi Arabia’s approach to ambitious development initiatives.

By Vafa Guliyeva