Saudi Arabia Scales Back Neom Megacity Amid Delays And Costs

Saudi Arabia’s grand vision for the future—a glittering, futuristic city stretching across the desert and promising to revolutionize urban life—has hit a major speed bump. The Neom megacity, once touted as the centerpiece of Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify the kingdom’s economy, is now being dramatically scaled back and reconsidered after years of mounting costs, repeated delays, and the harsh realities of global oil prices.

On January 24, 2026, Saudi Arabia’s Olympic and Paralympic Committee, alongside the Olympic Council of Asia, confirmed what many had suspected: the 2029 Asian Winter Games, scheduled for the Trojena region of Neom, would be postponed. Instead, the kingdom will pivot to hosting a series of standalone winter sports events. This announcement, as reported by Skift, comes as part of a broader reassessment of the Neom project’s scope and ambitions.

Originally unveiled five years ago, Neom was nothing short of audacious. The flagship feature, The Line, was announced as a 100-mile city of 500-meter-tall skyscrapers running through the Arabian Desert—an urban marvel that would house nine million people, operate without roads or cars, and run entirely on renewable energy, preserving 95% of its land for nature. The project, launched as part of the kingdom’s bid to move beyond its oil-dependent economy, was expected to cost a staggering $500 billion for The Line alone, with the entire Neom development ballooning to a reported $4.5 trillion by 2022, according to the Financial Times and LADbible.

But as the years wore on, cracks began to show. Construction of The Line was put on hold late in 2025, with Riyadh seeking a less costly approach. As of November 2025, roughly $50 billion had already been spent, and the government found itself running deficits. At a high-profile investment forum in Riyadh that month, one Saudi official admitted, “We rushed at 100 miles an hour. We are now running deficits. We need to reprioritise.” (The Independent)

The scale-back, confirmed by multiple sources including The Financial Times, affects not just The Line but also Trojena—the planned ski resort and former host site for the now-postponed Asian Winter Games. Sindalah, a yachting resort in the Red Sea and the only part of Neom to open so far, finally held its “grand opening” in October 2024—three years late and at three times the budget. The extravagant launch, featuring celebrities like Will Smith and Alicia Keys, failed to impress Prince Mohammed, who subsequently dismissed Neom’s CEO, Nadhmi al-Nasr, citing dissatisfaction with project management (The Independent).

The reasons for Neom’s retrenchment are as complex as the project itself. A primary factor is the drop in oil prices, which have slumped from $100 per barrel to around $60, drastically reducing the government’s financial flexibility. As Capital Economics analysts told Investing.com, “The backdrop of low oil prices appears to be forcing their hand.” Years of massive spending and ambitious deadlines collided with fiscal realities, prompting a “year-long review into the project” expected to conclude by the end of the first quarter of 2026 (Middle East Eye).

People briefed on the matter told The Financial Times that Prince Mohammed now envisions a “far smaller” project, recognizing the failings in the original, costly plan. “The Line will be a totally different concept. It will use the existing infrastructure in a totally different manner,” one source said. The city’s future is now uncertain, with insiders admitting it could face significant downsizing or even cancellation. Some reports suggest Neom’s focus may shift toward becoming a hub for data centers as Saudi Arabia seeks to position itself as a global leader in artificial intelligence (The Times, LADbible).

Meanwhile, the kingdom is also refocusing efforts on hard deadlines for the 2030 Expo international trade fair and the 2034 World Cup, both seen as crucial to its aspirations for global recognition and tourism. The Public Investment Fund (PIF), which owns Neom and is worth an estimated $1 trillion, has launched new ventures such as HUMAIN, aimed at developing AI and data center infrastructure—a clear signal of the changing priorities (LADbible).

The downsizing has not been without controversy. Neom has long faced criticism for being unrealistic and overambitious, as well as for its human rights record. The Saudi government has been accused of forcibly displacing members of the Howeitat tribe from the Tabuk province to make way for the city, with reports of arrests, detentions, and even an activist being shot dead in 2020 after protesting his eviction (Middle East Eye).

Despite setbacks, Saudi officials maintain that Neom remains a long-term vision. In a statement to the Financial Times, the project’s leaders said, “As a development that’s meant to span generations, Neom is advancing projects in line with strategic priorities, market readiness and sustainable economic impact.” The company emphasized that it is “always looking at how to phase and prioritise our initiatives so that they align with national objectives and create long-term value.”

For now, Neom’s most ambitious dreams—like a city without cars, roads, or emissions—are on hold, perhaps indefinitely. The kingdom’s pivot toward more pragmatic, tech-driven goals may be a sign of adapting to the times, as Saudi Arabia also embarks on social reforms to attract tourists and prepare for global events. Whether Neom’s scaled-back future will capture the world’s imagination as its original plans did remains to be seen, but one thing is certain: the era of unchecked megaprojects in the desert is over, at least for now.