Saudi Arabia’s high-flying Neom megaproject, a desertside future city, is running up against mounting financial costs. The ambitious vision of a huge coastal resort, luxury ski resort, and the 106-mile-long twin skyscraper complex called The Line is costing more than anticipated.
According to The Wall Street Journal (WSJ), the estimated cost to complete Neom fully by 2080 has risen to a whopping $8.8 trillion—more than 25 times Saudi Arabia’s annual budget. Worse, an audit report seen by WSJ uncovered proof of financial manipulation by some project officials.
Financial Manipulation and Increase in Costs
The audit report revealed that a few officials manipulated financial information in a deliberate effort to conceal the rising costs of Neom. The revelations expose the unrealistic magnitude of the project, which has been aggressively marketed by Saudi Crown Prince Mohammed bin Salman.
The WSJ also quoted officials as having tried to protect the crown prince from the economic truth. One strategy was to exaggerate the anticipated prices of stays at Neom’s ski resort to make astronomical returns legitimate. For example, a hotel room in a boutique hiking hotel priced at $489 per night originally was re-pegged to $1,866. The price of an “inventive glamping” site likewise rose from $216 to $794 per night.
These cost increases were allegedly backed by McKinsey consultants, a company heavily engaged in the planning of the project. A letter from Antoni Vives, the executive in charge of the Sindalah coastal resort, told consultants not to mention costs prior to a critical meeting. “We should not actively mention cost at all,” he wrote, according to the WSJ report.
The Line: Scaling Down Grand Plans
The Line, perhaps Neom’s most ambitious facet, has undergone drastic revisions too. Originally scheduled to stretch 100 miles along the desert landscape, the project for skyscrapers has already been drastically curtailed. The most recent revision brings down the first phase to merely 1.5 miles in the next decade—a far cry from the original intention.
Plans to lower the skyscrapers’ height to 1,600 feet from a proposed 1,000 feet were strongly rejected by Crown Prince Mohammed bin Salman. In spite of concerns about money, the leadership is committed to pushing on.
Neom’s development lead, Denis Hickey, stated at the World Economic Forum, “We’ll start to go vertical — hopefully — at the end of this year.” However, with so many financial and logistical challenges, whether these ambitious plans will come to fruition remains uncertain.
Leadership Shake-Up and Labor Concerns
Leadership turbulence also adds to uncertainty regarding the project’s future. Previous Neom CEO Nadhmi al-Nasr stepped down in November, weeks after a documentary reported that tens of thousands of foreign workers perished during construction.
At the same time, one of Neom’s showcase beach resorts, Sindalah, lies largely incomplete. Though there was a $45 million opening party in October, which featured the likes of Will Smith and Tom Brady, the golf course and hotels at the resort are not yet open for public use.
McKinsey’s Role and Continuing Controversy
McKinsey, which is among the project’s major consulting companies, has been said to earn more than $130 million a year from its services. McKinsey, however, dismissed claims of financial misreporting, saying, “The firm has not been involved in the manipulation of financial reporting.”
As Neom grapples with increasing costs, leadership turmoil, and fiscal scandals, the question lingers whether this new city will ever achieve its vision of the future—or if it will join the ranks of history’s most costly unfinished ventures.
