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Saudi Arabia’s grand vision of Neom—a cutting-edge megacity rising from the desert—has encountered serious financial hurdles. The ambitious project, which includes a luxury coastal resort, a ski destination, and The Line—an audacious pair of 1,600-foot skyscrapers stretching up to 106 miles—now faces severe cost overruns.
Financial Manipulation and Internal Concerns
According to a report by The Wall Street Journal (WSJ), capital expenditure estimates for Neom’s completion by 2080 have surged to $8.8 trillion—over 25 times the kingdom’s annual budget. This staggering cost escalation is casting doubts on the feasibility of the project, which has been championed by Saudi Crown Prince Mohammed bin Salman.
In a troubling revelation, an audit reviewed by WSJ found “evidence of deliberate manipulation” of financial data by certain project officials. The audit suggests that some members of Neom’s management altered figures to obscure the project’s mounting costs.
Adding to these concerns, officials have reportedly been attempting to shield the Crown Prince from the project’s financial difficulties. One such effort involved artificially inflating projected rates for accommodations at Neom’s planned ski resort to meet optimistic financial return targets. A boutique hiking hotel room, initially priced at $489, was readjusted to $1,866 per night. Similarly, an “inventive glamping” site saw its projected cost increase from $216 to $794 per night.
Scaling Down Neom Ambitions Amid Cost Concerns
The WSJ report also alleges that McKinsey & Company, a global consulting firm hired for the project, played a role in these adjustments. However, a McKinsey spokesperson has denied any involvement in financial misrepresentation, stating, “McKinsey has not been involved in the manipulation of financial reporting.”
Among the most striking setbacks is the downsizing of The Line, initially envisioned as a continuous 100-mile-long skyscraper. Plans for its initial phase have now been dramatically reduced to just 1.5 miles within the next decade. Even proposals to lower the height of the towers from 1,600 feet to 1,000 feet to save costs were reportedly rejected by Crown Prince bin Salman.
Despite the mounting obstacles, the kingdom is pushing forward. “We’ll start to go vertical—hopefully—at the end of this year,” said Denis Hickey, head of The Line’s development, at the World Economic Forum, as quoted by WSJ.
Neom Leadership Shakeups and Ongoing Challenges
Neom’s leadership has also faced instability. In November, former CEO Nadhmi al-Nasr stepped down, just weeks after a documentary alleged that tens of thousands of foreign workers had died during construction. Meanwhile, the coastal Sindalah resort, which was unveiled in a lavish $45 million launch party in October—attended by celebrities including Will Smith and Tom Brady—remains largely incomplete. The resort’s golf course and hotels have yet to open to the public, four months after the grand event.
As Neom struggles with financial and logistical hurdles, McKinsey continues to profit from its involvement. According to WSJ, the consulting firm has earned more than $130 million annually from its work on the project.
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