Saudi Arabia changes direction in talks: from a glittering “city of the future” to a site for infrastructure and data centers

Internal review nears completion after delays and budget overruns; Trojana desert ski resort loses bid to host 2029 Asian Winter Games

As we recently reported, THE LINE project Negotiations in the futuristic city of Neom in Saudi Arabia have failed. Now it has been announced that Saudi Arabia is planning Project NEOM Downsizing (Speech) and redesign of the mega-project along the Red Sea coast, after years of delays and budget overruns — according to a report in the Financial Times, based on sources involved in an internal review that is nearing completion. (Financial Times)

According to the report, Crown Prince Mohammed bin Salman, chairman of Neom, is now aiming for a project “much smaller” than the original vision. The most notable implication is a dramatic change in the plan of The Line — The “linear city” that was presented as the symbol of the project. According to the same sources, the architects are already working on an alternative concept, which aims to utilize some of the infrastructure that has already been established, but in a “modest” and more practical framework.

What's coming in: Data centers and AI targets

The new axis being considered is turning Neom into a hub for data centers, as part of Riyadh’s attempt to position itself as a major player in artificial intelligence and data infrastructure. According to the report, proximity to the sea is seen as an operational advantage (cooling with seawater), along with digital infrastructure and renewable energy plans. Neom told the FT that it “ranks and prioritizes” initiatives based on national goals, market maturity and sustainable economic impact, noting that the venture is focused on attracting investors and partners in the data and AI sectors.

Why now: financial pressure and international deadlines

The reason for the change, according to the FT, is the need to exercise fiscal prudence in a period of tighter liquidity, alongside oil prices that do not support the continuation of an “open check” for mega-projects. At the same time, Saudi Arabia has expensive commitments with tight timetables: Expo 2030 in Riyadh and the 2034 World Cup.
At the same time, Reuters had previously reported on the broader intention of the Public Investment Fund (PIF) to make strategic adjustments and reduce its emphasis on giant real estate projects, in favor of areas such as logistics, minerals and AI — a trend that is consistent with the “pivot” now hinted at in the talks. (Reuters)

A prominent warning sign: the postponement of the Asian Winter Games

One symbol of the change is the Trojena ski resort project. The Associated Press reported that Saudi Arabia and the Olympic Council of Asia have agreed to postpone indefinitely the 2029 Asian Winter Games that were scheduled to be held there — a decision that suggests a budget and performance strain, although no official reason was given. Reuters also reported the postponement, noting that no alternative schedule has yet been set.

Leadership change and internal review: “putting things in order” in the scope of the project

Neom entered the re-examination phase after the departure of longtime CEO Nadmi Al-Nasser, and the appointment of Ayman Al-Mudayfer as CEO (initially as acting) — a move that was officially announced on the Neom website in November 2024.
According to the FT, the review lasted about a year and is expected to be completed by the end of the first quarter of this year (or shortly thereafter), and at the same time, PIF's megaproject portfolio is also undergoing a re-examination.

More of the topic in Hayadan:

• A new virus, MERS, a relative of SARS, is ravaging Saudi Arabia
• The Failure of the “Line” in NEOM (Saudi Arabia): Why the “15-Minute City” Stuck at the Limits of Physics and Nature
• The snow is artificial, but the crisis is real: about the lack of snow at the ski resort
• where is the snow
• The first dinosaurs discovered in Saudi Arabia