Struggling to Secure Chinese Financing for Its Groundbreaking Development: Saudi Arabia's NEOM Faces Funding Dilemmas
NEOM Faces Challenges as Funding and Construction Progress Slow
NEOM, the futuristic city project in Saudi Arabia, is experiencing significant challenges and adjustments in its funding and construction status, according to recent reports. The total cost projection for the project has escalated to approximately $8.8 trillion, a dramatic increase from the original estimate of around $500 billion.
The flagship component of NEOM, The Line, has seen a reduction in its scale from an initial plan of 170 km length and 1.5 million population to an initial section of just 2.4 to 5 km housing about 300,000 people by 2030. This adjustment is attributed to difficulties attracting foreign investors and fluctuating oil prices.
Work on The Line has been ongoing but remains in the early phases, with underground and foundational construction underway. Above-ground construction is expected to begin at the end of 2025. However, the actual completion rate across NEOM projects is reported to be less than 1%.
The Trojena desert ski resort, planned to host the 2029 Asian Winter Games, continues but experiences construction delays caused by complex terrain and rock conditions. Despite these challenges, contractors affirm ongoing, albeit slow, progress and commitment to international standards.
Other NEOM projects, such as the green hydrogen project and the Red Sea resort Sindalah, are progressing well, with the green hydrogen project expected to reach major milestones in 2026-2027. The industrial city Oxagon remains mostly at planning or early stages.
NEOM officials have been actively seeking funds from investors, visiting regions in the United States of America, including New York, Boston, Washington D.C., Miami, Los Angeles, and San Francisco, as well as Beijing, Hong Kong, and Shanghai to court Chinese investors. The NEOM roadshow also visited Britain's London, France's capital city Paris, and Germany's Berlin.
NEOM has not announced any new projects or destinations beyond what has been previously mentioned, such as Utamo or the Trojena Mirage Visitor Center. The exhibition offered to Chinese investors aimed to give them an in-depth scope of what NEOM seeks to achieve.
Saudi officials appear committed to continuing the project, but independent reports indicate a recalibration of the project's original massive ambitions as of 2025. The reactions about the project were mostly neutral with not too much excitement from the targeted investors. NEOM has not announced any new challenges or struggles beyond what has been previously mentioned, such as the challenges faced by the Trojena project.
NEOM has not announced any reduction in the number of residents for The Line beyond the previously mentioned reduction from 1.5 million to less than 300,000. The exhibition was an invitation-only reception with business officials such as Leonard Chan, the chair of the Hong Kong Innovative Technology Development Association, in attendance.
