Why is Saudi Slowing Neom, its $1.5tn Construction Project?

The futuristic, US$1.5tn Neom development across Saudi Arabia is meant to be the biggest, most spectacular construction vision in modern history.

The vision has not changed, but the Arab state’s leaders are significantly downscaling Neom’s construction because of rising costs and repeated delays.

The flagship project, which was scheduled for completion in 2030, includes plans for a city named The Line, consisting of a vast stretch of 500m skyscrapers in the desert.

Construction of the city is on hold while leaders consider a more realistic timeline.

Vision 2030 and the PIF mandate

The birth of Neom is linked to HRH Crown Prince Mohammed bin Salman’s Vision 2030, a strategic framework designed to end the Saudi Arabian economy’s dependence on oil.

Funded primarily by the Public Investment Fund (PIF), Neom is the "crown jewel" of the Kingdom's Giga-projects.

It is meant to be a global branding vehicle for a "New Saudi Arabia" – one that is technologically advanced, socially progressive and open to international capital.

However, with oil prices fluctuating and the Kingdom seeking to manage a widening budget deficit, the "100-mile linear city" dream of The Line has been re-evaluated.

Instead, there will be more focus on high-value segments that offer immediate economic returns, such as luxury tourism and digital infrastructure.

The giants building the future

The scale of Neom has demanded the involvement of a who’s-who of global engineering and construction companies.

The project is the world’s largest customer for civil engineering services, while key international and domestic businesses have secured multi-billion dollar contracts to deliver the foundational infrastructure.

They include:

• WeBuild (Italy)

The Italian contractor is spearheading the US$5bn dam project at Trojena. This includes the construction of three dams to create an artificial lake to support the mountainside ski resort

• Vinci SA and ACS (Europe)

These firms, alongside regional heavyweights Nesma & Partners and Al Bawani, are heavily involved in the backbone infrastructure of Neom – the high-speed rail links and underground utility tunnels that were designed to sit beneath The Line.

• China State Construction Engineering Corp (CSCEC)

CSCEC is instrumental in the rapid vertical construction of residential and administrative clusters, using modular construction techniques to meet aggressive deadlines.

Procurement and logistics: The US$10bn DSV joint venture

For procurement executives, one of the most significant developments in Neom’s operational history is the US$10bn logistics joint venture with DSV.

It was established in late 2023 and will be fully operational this year.

The partnership (51% NEOM, 49% DSV) is responsible for the end-to-end supply chain management of the entire region.

Neom is seen as a logistical "black swan" event.

The sheer volume of materials – from sustainable timber to high-grade steel and sensitive AI hardware – requires a dedicated ecosystem.

The joint venture is currently developing an innovation centre at Oxagon to pioneer autonomous freight and carbon-neutral last-mile delivery.

For global suppliers, the Neom Supplier Portal has become a critical gateway, with the project seeking partners who can adhere to circular economy principles and the highest ESG standards.

Retail: ultra-luxury and the lifestyle economy

Neom is also designed to attract the world’s top 1% of talent and tourists. Consequently, the retail and hospitality strategy is anchored in ultra-luxury.

In 2026, the first major luxury destination, Sindalah, has set the benchmark, including:

• Marriott International

The group has signed agreements to bring its elite brands to Neom, including a Ritz-Carlton Reserve at Trojena and W Hotels within the Lake Village

• The Experience economy

Retail in NEOM is shifting away from traditional malls toward integrated experiential hubs. In the mountain resort of Trojena, retail spaces are designed to blend into the landscape, offering high-end tech-wear, luxury boutiques and bespoke dining

• Automated commerce

Retailers are testing frictionless shopping experiences powered by AI, where biometrics and computer vision replace traditional checkouts.

Current development status

The development of Neom is happening at varying speeds across its four main regions. The most significant shift is towards AI.

Recognising the global demand for compute power, the PIF has unveiled HUMAIN, a venture focused on transforming sections of Neom into a global hub for data centres and AI research.

The major Neom projects are at varying stages:

• The Line: While originally planned to house 9 million people across 170km, the focus is currently on the first 2.4 km "starter" segment, which is a proof-of-concept for high-density, car-free living
• Sindalah: This luxury island destination is the most mature, having officially opened its doors to the global yachting community.
• Trojena: Construction remains intensive as the site prepares for the 2029 Asian Winter Games. The focus here is on the Vault – a futuristic "folded village" built into the mountain.
• Oxagon: The octagonal industrial port is becoming a hub for green hydrogen production and automated manufacturing.

Beyond the mirrored walls of The Line, two projects stand out for their technical complexity.

The Oxagon Port is set to be the world's first fully automated port and integrated supply chain.

It is the site of the NEOM Green Hydrogen Company (NGHC), which aims to be the world’s largest utility-scale green hydrogen plant.

Epicon is a luxury coastal destination featuring two jagged, futuristic towers that appear to rise from the desert. Epicon is designed to be a "digital detox" haven.