$50 Billion Spent, What Went Wrong At Saudi Arabia’s Sci-Fi Desert Paradise
Private yachts were moored nearby, and some of the biggest celebrities were in attendance as Saudi Arabia partially opened Neom, its ambitious $500 billion mega-city in the desert. The event was meant to showcase Saudi Arabia’s vision for the future. But there are hudles.
According to a Wall Street Journal report, the first phase of the project, Sindalah, was years behind schedule and vastly over budget. Initially projected to cost $1.3 billion, the luxury resort’s price tag had ballooned to nearly $4 billion. Most notably, Crown Prince Mohammed bin Salman -the project’s mastermind – was absent from the event. Weeks later, Neom’s CEO, Nadhmi al-Nasr, was replaced.
Since its 2017 launch, Neom has consumed more than $50 billion, the report says, but its boldest ideas – such as a floating business district, a ski resort in the desert, and a 170-kilometre-long linear city – have struggled to materialise.
The Wall Street Journal accessed reports which reveal widespread financial manipulation within Neom’s leadership. An internal audit found evidence that executives, with assistance from consultants McKinsey & Co., had used overly optimistic financial projections to justify surging costs. The audit cited “deliberate manipulation” of figures by “certain members of management.”
The report claims that a draft board presentation from 2023 estimated that completing Neom by 2080 would require $8.8 trillion – more than 25 times Saudi Arabia’s annual budget. Even the first phase, set to run until 2035, is expected to cost $370 billion.
Neom was meant to redefine urban living, with Crown Prince Salman comparing it to the Egyptian pyramids. The Line, its centrepiece, was envisioned as a futuristic city stretching 170 kilometres across the desert, housed within two parallel skyscrapers taller than the Empire State Building.
But the scale has proved overwhelming. The original plan to build 16 km of The Line by 2030 was already ambitious, requiring more glass and steel than exists in entire cities. Even that was later revised down to 2.4 km, with only a half-mile section, including a stadium – expected by 2034.
Engineering challenges and rising costs have forced compromises. The Line’s 1,640-foot height makes construction difficult, and Neom officials suggested lowering it to 1,000 feet to cut costs. The Crown Prince rejected this, insisting on finding savings elsewhere.
The ski resort, Trojena, has also seen costs spiral. The Wall Street Journal, citing a 2023 review, found a $10 billion surge in expenses. To balance the books, revenue projections were reportedly inflated – hotel room rates were suddenly tripled or quadrupled to justify the investment.
Saudi officials have long insisted that Neom will eventually attract private investment. But foreign direct investment in the kingdom remains far below targets – just $26 billion in 2023, against an official 2030 goal of $100 billion per year.
Potential investors remain wary. Many are concerned about the scale and complexity of the projects, as well as the regulatory environment in Saudi Arabia. The International Monetary Fund has urged greater transparency on project spending.
