The Saudi crown family’s megalomaniac dreams of building a gigantic city of the future in the middle of the desert are getting a brutal reality check.
Saudi Arabia’s plans for Neom, a futuristic fever dream which includes a massive all-inclusive resort on the coast, a second ski resort in the mountains, and an up to 106 miles-long pair of 1,600-foot skyscrapers called The Line, is running into major financial problems.
As the Wall Street Journal reports, capital expenditure estimates to build Neom to what officials call its “end-state” by 2080 have ballooned to $8.8 trillion, which is over 25 times the kingdom’s annual budget.
Worse yet, an audit report reviewed by the newspaper found that officials were trying to fudge the numbers to hide evidence of the project’s ballooning costs. The audit found “evidence of deliberate manipulation” of finances by “certain members of management.”
It’s a damning new development that highlights the grandiose and unrealistic goals set by Neom’s main advocate, Saudi crown prince Mohammed bin Salman.
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According to the WSJ, officials are trying to shield the royal from harsh realities as well. For instance, in an apparent attempt to make it appear as if Neom’s ski resort had an internal rate of return that met some sky-high expectations, officials hiked up the projected prices of staying at the yet-to-be-completed site. One “boutique hiking hotel” room, previously priced at $489, was readjusted to cost $1,866. An “inventive glamping” site shot up in price from $216 to $794 a night.
These efforts were reportedly aided by McKinsey consultants hired by the project.
Officials then tried to hide the manipulation of costs. An email revealed that Antoni Vives, who was put in charge of Neom’s coastal resort called Sindalah, told consultants that “we must not proactively mention cost at all” before a key meeting, per the WSJ.
The Line, in particular, has shot up in costs significantly. The original plan was to have the skyscraper stretch 100 miles through the desert, but that plan is looking increasingly unlikely. Even schemes for a first piece of the skyscraper were revised from ten miles to just 1.5 miles within the next decade.
Recommendations to reduce the planned height of the pair of skyscrapers to around 1,000 feet from 1,600 feet to save costs were vehemently opposed by crown prince bin Salman himself.
Still, the current goal is to open up the first half of the project’s first piece by 2034.
“We’ll start to go vertical — hopefully — at the end of this year,” The Line development lead Denis Hickey said at this year’s World Economic Forum, as quoted by the WSJ.
In short, the kingdom’s Neom project appears to have turned into a mess of unprecedented proportions. And even leadership is on some shaky grounds. Neom’s former CEO Nadhmi al-Nasr quit in November, weeks after a documentary alleged that tens of thousands of foreign workers had already died during the city’s construction.
As of right now, Sindalah is still largely unfinished, despite Saudi officials throwing a lavish, $45 million launch party in October. The event was attended by high-profile celebrities, including actor Will Smith and football quarterback Tom Brady.
But the resort’s golf course and hotels have yet to open to the public four months later.
Meanwhile, consulting firm McKinsey is making bank. According to the WSJ, the company has earned more than $130 million a year for its services. A spokesperson, however, denied that the firm “has been involved in the manipulation of financial reporting.”
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