The latest
Saudi Arabia is preparing to absorb a massive cost for winding down parts of Neom, with the project’s 2026–2030 budget allocating 60 billion riyals ($16 billion) to compensate contractors and exit long-term agreements, according to Semafor, citing people familiar with the matter.
The figure highlights how expensive it has become to scale back one of the centerpiece projects of Crown Prince Mohammed bin Salman’s Vision 2030 agenda after years of spending and large-scale contracting.
Details
• Neom was once expected to cost more than $1 trillion to build before Saudi authorities began reassessing the project’s scope and priorities.
• Sources told Semafor that cancellation costs tied to projects such as The Line could amount to more than one-third of the Saudi government’s projected budget deficit for 2026.
• The shift follows a strategic review launched after Aiman Al-Mudaifer became Neom’s chief executive last year. The review reportedly included restructuring, layoffs, and a reassessment of development plans across the project.
• Saudi officials maintain that projects have not been canceled outright. In April, Public Investment Fund Governor Yasir Al-Rumayyan said the fund was reprioritizing spending as part of its 2026–2030 strategy.
• Saudi Arabia has already spent about $64 billion on Neom, according to the report’s sources.
• Despite the pullback, several projects continue to move forward, including Oxagon, the industrial city whose port has become increasingly important as a logistics hub following regional shipping disruptions and the war with Iran.
• Neom’s $8.4 billion green hydrogen project in Oxagon is also nearing completion.
• The company still plans to spend 1$10.6 billion on new developments, with most of the funding directed toward industrial infrastructure designed to attract manufacturers, data centers, and other private-sector investments.
Delays and Cancellations
According to the report, major tourism developments such as Magna and Trojena are not expected to receive new funding until the next decade.
Sindalah, the luxury yacht island that opened with significant fanfare in 2024, was reportedly shut down shortly afterward, and its future remains unclear.
Neom has also canceled several major contracts in recent months, including agreements with Italy’s Webuild as well as Malaysia’s Eversendai and South Korea’s Hyundai Engineering & Construction.
What to watch
The latest changes suggest Saudi Arabia is shifting its focus from high-profile mega-projects toward investments with clearer economic returns and stronger appeal to foreign investors. The key question now is how far Neom’s downsizing will go and whether delayed projects will eventually return to the kingdom’s long-term development plans.
