Saudi Arabia’s ambitious development project Neom has finally ratified the ongoing strategic review of its flagship initiative, The Line. This move comes as international investor concern about Saudi Arabia’s public finance situation grows. The country is contending with an increasing budget deficit and declining oil prices. The court’s review represents an immensely important turning point for The Line. This ambitious project isn’t your average American metropolis—it would be a high-tech, 105 mile-long city built in the middle of the northwestern desert.
At the center of The Line stand two iconic glass skyscrapers, each soaring over 1,600 feet into the sky. This hugely ambitious plan is meant to offer housing for nine million people. Neom’s officials assert that such strategic assessments are “common practice” for long-term megaprojects, indicating a proactive approach towards the project’s viability and sustainability.
Today The Line is still very much just that—a constantly expanding construction site, with creative teams around the world still trying to realize its ambitious blueprints. The public investment fund has brought in consulting firms to determine the technical feasibility of the project. They’re conducting a feasibility study to determine financing options and to estimate its potential economic impact. Neom is preparing mass redundancies throughout the mega-project. This detailed retrospective serves to underscore the many perils that beset this ambitious initiative.
Tim Callen, a consultant familiar with the project, noted that many of these large-scale developments will need to be reassessed and reprioritized.
“So many of these projects are going to have to be reassessed, reprioritized. Does that mean Neom is not going to happen? No, I think Neom will definitely continue in some form. But whether it’s on a smaller scale and over a longer duration than originally envisaged, is quite likely, I think.” – Tim Callen
Neom’s total cost has already ballooned to $1.5 trillion, calling into question the project’s financing and economic sustainability. As the project moves forward, thoughtful changes are required to continue matching the project with today’s market realities. Tarik Solomon, Yet Another Industry Consultant™, made the point that it’s all about trust and setting expectations.
“For a project of this scale to succeed, it has to adjust to market realities and it has to build trust.” – Tarik Solomon
Solomon pointed out the importance of having architectural and consulting firms on board with the initiative.
“The architectural and consulting firms involved have an important role here and they should have more of a sense of ownership and responsibility to carry.” – Tarik Solomon
The review signals a dawning awareness among Neom’s top brass that prudent financial judgments are going to be indispensable to the project’s enduring success.
“They’re finally starting to make financially sound decisions.” – Consultant working for the project
Neom has received international publicity as a next-generation development that aims to change the way people live and work in Saudi Arabia, and beyond. As the country faces restless economic tides, it’s increasingly questioning the practicality of such sweeping grand ambitions.
Our goal for this strategic review will be to address these major concerns with the technological capabilities required to activate The Line. It will investigate the project’s broader cost impacts. At this panel, Callen made a salient point about the urgent issues at hand regarding technology and the cost of development with the volatility of oil prices.
“I think these are all areas where people have had questions in the past; is the technology there to actually achieve what Neom wants to do? Is the cost of development too high? That’s clearly become an even more pressing issue as oil prices have headed down the last couple of years.” – Tim Callen