Saudi Arabia Rethinks NEOM's Futuristic Dream Amidst Rising Costs and Shifting Priorities

When Saudi Arabia unveiled NEOM in 2017, it promised nothing short of a city from the future. Crown Prince Mohammed bin Salman presented the mega-project as the centrepiece of the kingdom's Vision 2030 strategy to reduce dependence on oil. The plans included flying taxis, robot assistants, a 170-kilometre-long mirrored skyscraper known as The Line, a desert ski resort and a floating industrial city. Initially backed by a $500 billion commitment, later internal estimates reportedly put the cost of fully realising the vision at around $8.8 trillion. Nearly a decade later, however, rising costs, lower oil revenues and shifting priorities have forced Saudi Arabia to slow down and rethink parts of its futuristic dream.

Inside Saudi Arabia's $9 trillion dream city and its 170-km-long skyscraper

NEOM is a vast region in north-western Saudi Arabia overlooking the Red Sea. According to official figures from NEOM, it spans around 26,500 square kilometres and includes more than 460 kilometres of coastline. Announced in October 2017, the project was designed to diversify the Saudi economy beyond oil through tourism, technology and advanced manufacturing. The development consists of several major projects, including The Line, Oxagon, Trojena and Sindalah. Saudi leaders envisioned NEOM as a global centre for innovation powered by renewable energy and artificial intelligence. The most ambitious element of NEOM was The Line, a pair of parallel mirrored skyscrapers stretching 170 kilometres across the desert and rising 500 metres high. According to NEOM, the city was designed to house up to nine million people, with all essential services reachable within a five-minute walk. Officials promised no roads, no cars and no carbon emissions. High-speed transport would allow residents to travel from one end to the city to the other in just 20 minutes. Images released by Saudi authorities portrayed a futuristic urban landscape unlike anything previously attempted.

How costs ballooned from $500 billion to nearly $9 trillion

When NEOM was first announced, Saudi Arabia said the project would be backed by $500 billion from the government, the Public Investment Fund and international investors. However, later internal estimates cited by international media suggested that fully building NEOM and its associated projects could cost around $8.8 trillion, exceeding twice Saudi Arabia's annual GDP. Experts have long questioned whether such an enormous undertaking could be delivered within the original timeframe. Building entirely new infrastructure in a remote desert region requires vast amounts of steel, concrete, water and energy, making the project one of the most expensive construction plans ever conceived.

Lower oil prices have squeezed government finances

Despite years of economic diversification, Saudi Arabia remains heavily dependent on oil revenues. Fluctuating oil prices and production cuts have reduced government income, while public spending has continued to rise. According to Reuters, Saudi Arabia recorded a first-quarter budget deficit of around 125.7 billion riyals, equivalent to about $33.5 billion, in 2026. Economists say these pressures have forced the government to prioritise projects that can generate quicker returns and postpone some of the kingdom's most ambitious plans.

Saudi Arabia's sovereign wealth fund is changing priorities

Much of NEOM's funding comes from Saudi Arabia's Public Investment Fund (PIF), which manages assets worth roughly $925 billion. According to Reuters, the fund's new 2026-2030 strategy will focus 80% of investments inside Saudi Arabia while shifting attention towards industries capable of producing faster economic benefits. PIF governor Yasir Al-Rumayyan has said no projects have been cancelled, but acknowledged that priorities have changed. Instead of concentrating on massive real estate developments, the fund is increasingly focusing on sectors such as logistics, clean energy, technology and manufacturing.

FIFA World Cup 2034 preparations have become a major priority

Saudi Arabia's successful bid to host the 2034 FIFA World Cup has created another major spending requirement. The kingdom will need to build or upgrade stadiums, airports, transport networks and tourism facilities to accommodate millions of visitors. Analysts believe preparations for the tournament are influencing spending priorities. Reports suggest resources are increasingly being directed towards projects with clear economic benefits and strict deadlines, leaving less room for costly long-term developments.

Regional instability and oil market concerns have added pressure

The Middle East has faced heightened tensions in recent years, while disruptions to trade routes and uncertainty over future energy demand have created additional risks. Reuters reported that some Gulf companies have even explored using the Port of NEOM as an alternative trade route amid disruptions around the Strait of Hormuz. Although the port has gained strategic importance, economists say regional instability has made governments more cautious about committing unlimited funds to projects that may take decades to deliver returns.

Even NEOM's first luxury destination struggled

Sindalah, a luxury island destination within NEOM, was supposed to showcase the project's success. A glamorous launch event was held in 2024, attended by celebrities and wealthy guests. However, According to reports, that the resort had never fully opened to the public and would now be taken over by Red Sea Global for redevelopment. Sources familiar with the project said unrealistic deadlines and construction problems contributed to the setback. The island's marina also faced issues caused by strong winds and wave conditions that had not been properly considered during planning. The problems at Sindalah highlighted the practical challenges involved in delivering Saudi Arabia's ultra-ambitious projects.

Saudi Arabia insists NEOM is a long-term vision

Despite reports of delays and spending cuts, Saudi officials insist that NEOM remains central to Vision 2030. Finance Minister Mohammed Al-Jadaan has described the country's spending strategy as a "deficit by design", arguing that transformation projects require patience. Meanwhile, NEOM itself now describes developments such as The Line as multi-generational projects that will be built in phases rather than completed all at once. Officials maintain that the vision has not been abandoned, only recalibrated.

What parts of NEOM are still moving ahead?

While The Line has lost momentum, several components of NEOM continue to receive support. Oxagon, the industrial and logistics hub located on the Red Sea, has become increasingly important because of its ports and manufacturing facilities. Trojena, the mountain resort selected to host the 2029 Asian Winter Games, is also under development, although some contracts have reportedly been revised. Saudi authorities are also continuing to invest in infrastructure, data centres and transport networks that support the broader Vision 2030 programme.

Was NEOM simply too ambitious?

NEOM captured the world's imagination with promises of flying taxis, robot servants, AI-powered services and a city stretching longer than many countries. But turning science fiction into reality requires enormous financial resources and decades of investment. Soaring costs, lower oil revenues, regional tensions and competing priorities such as the 2034 FIFA World Cup have forced Saudi Arabia to slow down and rethink parts of its grand vision. The project is far from dead, but the futuristic wonderland once promised now appears to be evolving into something far more practical and far less extravagant than originally imagined.