Who could’ve seen this coming?
The Saudi royal family’s grand ambitions to build a futuristic city in the desert are facing a harsh reality check.
Saudi Arabia’s Neom project, which includes an all-inclusive coastal resort, a second ski resort in the mountains, and a massive 106-mile-long pair of 1,600-foot skyscrapers called The Line, is now grappling with significant financial challenges.
As reported by the Wall Street Journal, the estimated cost to complete Neom by 2080 has skyrocketed to $8.8 trillion—more than 25 times the kingdom’s annual budget.
To make matters worse, an audit reviewed by the newspaper revealed attempts by officials to manipulate financial records and conceal the soaring costs. The audit uncovered “evidence of deliberate manipulation” by “certain members of management.”
This marks a significant blow to the project and underscores the lofty, unrealistic goals of Neom’s primary advocate, Saudi Crown Prince Mohammed bin Salman.
According to the WSJ, officials are reportedly trying to shield the royal family from the harsh realities surrounding the Neom project. In one example, to make it appear that Neom’s ski resort was meeting its sky-high return expectations, officials inflated the prices for staying at the still-unfinished site. A room at the “boutique hiking hotel” was adjusted from $489 to $1,866, while the price for an “inventive glamping” site soared from $216 to $794 per night.
These efforts were reportedly assisted by McKinsey consultants hired for the project.
Additionally, officials attempted to conceal the manipulation of costs. In one email, Antoni Vives, who was put in charge of Neom’s coastal resort, Sindalah, told consultants, “We must not proactively mention cost at all” before a crucial meeting, according to the WSJ.
The costs for The Line have especially spiraled. Initially planned to stretch 100 miles through the desert, this goal now seems increasingly out of reach. Even the plans for the first section of the skyscraper have been scaled back from ten miles to just 1.5 miles over the next decade.
Proposals to cut the planned height of the skyscrapers from 1,600 feet to 1,000 feet in order to save costs were strongly opposed by Crown Prince Mohammed bin Salman himself.
Nevertheless, the goal remains to open the first half of the first section of the project by 2034.
“We’ll start to go vertical—hopefully—at the end of this year,” Denis Hickey, The Line development lead, said at this year’s World Economic Forum, according to the WSJ.
In short, the Neom project has become a tangled mess of unprecedented proportions, and even leadership is facing turbulence. Neom’s former CEO, Nadhmi al-Nasr, resigned in November, just weeks after a documentary claimed that tens of thousands of foreign workers had already died during the city’s construction.
Currently, Sindalah remains largely unfinished, despite Saudi officials hosting a lavish $45 million launch party in October. The event attracted high-profile celebrities, including actor Will Smith and football quarterback Tom Brady.
However, the resort’s golf course and hotels have yet to open to the public, even four months later.
Meanwhile, consulting firm McKinsey is reaping substantial profits. According to the WSJ, the company has been earning over $130 million annually for its services. A spokesperson, however, denied any involvement in “manipulating financial reporting.”
