Digital render of NEOM’s The Line challenge in Saudi Arabia
The Line, NEOM
DUBAI, United Arab Emirates — Saudi Arabia’s sovereign wealth fund is reassessing its flagship $500 billion futuristic metropolis referred to as The Line.
The general public funding fund has tapped consulting corporations to conduct a strategic evaluation into the feasibility of the 105-mile linear metropolis, situated at Neom — itself an enormous new growth in Saudi Arabia.
Neom confirmed the information, first reported by Bloomberg, saying that strategic checks are “widespread observe” on long-term megaprojects.
However the transfer comes amid international scrutiny of Saudi Arabia’s formidable infrastructure agenda, in addition to rising stress on public funds.
Neom didn’t element what the evaluation could be targeted on, however “it is doubtless that it is going to have a look at technical feasibility, financing and in addition financial influence,” in line with Tim Callen, a visiting fellow on the Arab Gulf States Institute.
“I feel these are all areas the place folks have had questions previously; is the know-how there to really obtain what Neom needs to do? Is the price of growth too excessive? That is clearly turn into an much more urgent problem as oil costs have headed down the final couple of years,” Callen instructed CNBC’s Entry Center East on Friday.
The positioning of The Line, in Saudi Arabia’s northwestern desert, is at present a sprawling development web site replete with cranes and pile drivers, and a just lately constructed highway. Lengthy parallel tracks minimize by the sand, comprising the backbone of what planners say might be a high-speed rail system.
Development for The Line challenge in Saudi Arabia’s NEOM, October 2024
Giles Pendleton, The Line at NEOM
It is designed to be a high-tech metropolis sandwiched between two glass skyscrapers — every greater than 1,600 ft excessive — which the Saudi authorities says will ultimately home 9 million folks.
The challenge is simply one of many hyper-futuristic venues deliberate in Neom, the brainchild of Saudi Crown Prince Mohammed bin Salman and a area that the dominion hopes will carry thousands and thousands of latest residents to Saudi Arabia and revolutionize residing and know-how within the nation.
It is a core pillar of Imaginative and prescient 2030, which goals to diversify the Saudi financial system away from oil revenues and create new jobs and industries for its burgeoning younger inhabitants.
The price of Neom as an entire has been estimated to be as excessive as $1.5 trillion. After a few years of seemingly limitless spending, 2024 started to see an abrupt shift as the Saudi price range deficit grew and the worth of a barrel of oil fell nicely beneath what the dominion must steadiness its price range.
“It is clear that if oil costs, as you have been saying earlier, are round $70 a barrel, that is a really totally different atmosphere than if they’re $100 a barrel, the place they have been on common in 2022,” the Arab Gulf States Institute’s Callen mentioned. Worldwide benchmark Brent crude was buying and selling at $70.15 per barrel at 2:15 p.m. London time on Friday.
“So many of those tasks are going to must be reassessed, reprioritized. Does that imply Neon shouldn’t be going to occur? No, I feel Neom will certainly proceed in some kind. However whether or not it is on a smaller scale and over an extended period than initially envisaged, is kind of doubtless, I feel.”
‘Sure man’ mentality
There has additionally been a good quantity of criticism for what some within the kingdom describe as a “yes-man” mentality at Neom, the place consultants and advisors are mentioned to supply extremely optimistic forecasts and cost-revenue projections in an effort to remain of their employers’ favor.
“I do not assume expectations have been managed nicely from a management perspective on the challenge stage,” Tarik Solomon, chairman emeritus on the American Chamber of Commerce in Saudi Arabia, instructed CNBC.
“For a challenge of this scale to succeed, it has to regulate to market realities and it has to construct belief.”
Solomon praised Neom and The Line as being “one of many boldest concepts I’ve seen that has really gone into execution,” however added that “the architectural and consulting corporations concerned have an necessary function right here and they need to have extra of a way of possession and duty to hold.”
In tandem with the deliberate “evaluation” of The Line, job cuts are deliberate throughout Neom as an entire, one guide who works for the challenge instructed CNBC.
“They’re lastly beginning to make financially sound choices,” the guide, who requested to stay nameless as a consequence of restrictions on talking to the press, mentioned.
Neom didn’t instantly reply to a CNBC request for remark.
