Saudi Arabia asks consultants to review feasibility of 'The Line' megaproject: Report
The kingdom's public investment fund (PIF) asked the consultants to determine whether its plans to build the car-free city are feasible, Bloomberg reported on Monday.
The report is likely to pile on more scepticism about The Line's future.
In April, The Financial Times reported that the CEO of Neom had launched a 'comprehensive review' of the kingdom's megaproject.
Neom, along with luxury Red Sea hotels and a ski resort, is the flagship project of Crown Prince Mohammed bin Salman's Vision 2030 plan to transform the kingdom's economy and reduce its dependence on oil revenue.
New MEE newsletter: Jerusalem Dispatch
Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters
Bloomberg reported in 2024 that Saudi Arabia was cutting back plans for The Line. Instead of 1.5 million people living there by 2030, Saudi officials were said to anticipate fewer than 300,000 residents. Meanwhile, only 2.4km of the city is expected to be completed by 2030.
The Line was unveiled with much fanfare by Saudi Crown Prince Mohammed bin Salman in 2021, with a short clip displaying some of human history's biggest technological advancements over the last century, including the moon landing and the creation of the internet. It then asked, 'What's next?' and the answer came in the form of a televised address from the crown prince.
He said that the 170km city would have 'zero cars, zero streets and zero carbon emissions' and that its one million inhabitants could fulfil all their daily requirements, including education and leisure, within a five-minute walk of home.
The crown prince also said it would be possible to travel from one end of The Line to the other in 20 minutes, implying that a very high-speed rail service would be built.
At the time, Saudi Arabia said it expected the city to contribute $48bn to the kingdom's economy and create 380,000 jobs.
Why Saudi Arabia can spend more money than it makes, even as oil prices drop Read More »
The kingdom has pushed through liberalising social reforms, even as it cracks down on dissent. It has also opened up its economy, including recently legalising real estate purchases for foreigners.
However, the more grandiose megaprojects have faced setbacks due to their high cost and falling oil prices. Oil still accounts for roughly 61 percent of Saudi Arabia's revenue, according to its 2025 budget.
Brent crude, the international benchmark, has been trading for under $70 per barrel for most of this year.
For years, Saudi Arabia was the main proponent of restricting supply in an alliance alongside Russia dubbed Opec+. The kingdom absorbed most of the production cuts within Opec+, while Iraq, the United Arab Emirates, and Kazakhstan boosted production.
In April, Saudi Arabia led Opec+ in a surprise move to boost production, in what energy analysts said was a move designed to punish 'cheaters' exceeding production limits. The new supply has put more downward pressure on prices.
In April, Goldman Sachs painted a bleak picture for Saudi Arabia's projects in a note to clients, projecting 'pretty significant' budget deficits and more scaling back of megaprojects.
Neom has already faced internal challenges. Nadhmi al-Nasr, who managed Neom's construction from 2018 to 2024, departed from his post in November.
Nasr earned a chilling reputation managing Neom. He bragged that he put everyone to work 'like a slave', adding, 'When they drop down dead, I celebrate. That's how I do my projects.'
Two other foreign executives also left Neom at the end of 2024, according to The Wall Street Journal. One reportedly disparaged Islam, made lewd references about sexual positions and said women from the Arabian Gulf looked like 'transvestites'.
Aiman al-Mudaifer was appointed CEO of Neom in November after overseeing a real estate division of the kingdom's nearly $1 trillion PIF.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
44 minutes ago
- Zawya
Low Aramco dividend likely to double 2025 Saudi budget deficit
A steep fall in dividends by the state oil company Saudi Aramco will double the Gulf Kingdom's budget deficit in 2025 despite an expected fall in spending, a think-tank in the world's dominant oil exporter said on Friday. Saudi Arabia has projected a 2025 budget deficit of around 101 billion Saudi riyals ($27 billion), assuming an average price for its crude of $75 and oil output of 9.5 million barrels per day (bpd). In the first quarter of this year, the Kingdom recorded a fiscal deficit of SAR 58.7 billion ($15.5 billion) as revenue declined by 10 percent year-on-year due to lower oil revenue, while spending was five percent higher. 'Our fiscal outlook is largely unchanged from our report in the first quarter. The budget deficit will widen in 2025, to 4.3 percent of GDP from 2.5 percent of GDP in 2024,' Jadwa Investment company said in a report. The consultancy firm expected the actual budget deficit at around SAR202 billion ($54 billion), adding that lower oil prices and minimal Performance-Linked Dividends (PLDs) from Saudi Aramco are driving the wider shortfall. An expected increase in non-oil revenue and a five percent decline in total budget spending will help limit the budget deficit, it said. 'Taking a closer look at revenue dynamics, we expect budget oil revenue to decline by around 23 percent compared to 2024,' Jadwa said. It attributed the forecast drop to lower oil prices, which leads to lower royalty and income tax payments from Saudi Aramco to the budget. A second reason is a 31.5 percent decline in total dividends due from Saudi Aramco this year, Jadwa said, noting that the ordinary dividend has risen by four percent for 2025—an increase of SAR10 billion ($2.6 billion) into the budget. 'However, the PLD for the budget will be minimal at SAR2.7 billion ($720 million) compared with SAR132 billion ($35.2 billion) in PLD follows a formula and has dropped away because of lower oil revenue in 2024,' Jadwa said. 'Turning to spending, we expect a decline of five percent in 2025, to SAR1.3 trillion ($347 billion) close to the budget which indicated a decline of 6.4 percent.' Experts said the wider deficit remains under management in Saudi Arabia as it could be easily funded through bonds given the Kingdom's massive assets and high credit rating. 'The deficit to GDP in Saudi Arabia is minimal….the debt to GDP is also still under control at around 30 percent, far below than the limit in the European Union,' well-known Saudi economist Ihsan Buhlaiga told Zawya Projects. Saudi Arabia's public debt stood at around SAR1.2 trillion ($320 billion) at the end of 2024 and Jadwa projects it to swell to SAR1.4 trillion ($373 billion) at the end of 2025. (Reporting by Nadim Kawach; Editing by Anoop Menon)
Zawya
2 hours ago
- Zawya
Robust economic growth fuels Saudi real estate performance
Saudi Arabia's robust economic growth, driven by a 4.9% expansion in non-oil GDP, is fuelling strong performance across the real estate market, according to CBRE Middle East, a global leader in commercial real estate. The second quarter witnessed a dynamic and evolving real estate landscape in Saudi Arabia, driven by a combination of policy adjustments and strategic initiatives, stated CBRE in its 'Q2 2025 Saudi Arabia Real Estate Market Review. Real GDP in Q1 2025 expanded by a robust 3.4%, though the full-year forecast has been adjusted to approximately 3.5% due to a more conservative outlook for the oil sector. The kingdom remains committed to its Vision 2030 initiatives and fostering sustainable economic growth. The implementation of the Real Estate Transaction Tax (RETT) and strategic realignments within the construction sector shaped the market dynamics. Moreover, the kingdom's logistical prowess improved, with a rise in the Agility Emerging Markets Logistics Index, stated the CBRE report, which highlights strong growth across key sectors. The Hail region attracted substantial investment, demonstrating its strategic importance, while several major mixed-use developments, such as Osus Eye in Riyadh, the Pulse Wadi District, and the ongoing advancement of the Dar Al Hijra project in Madinah, underscored the Kingdom's commitment to economic diversification and urban growth. According to CBRE, the office market in Saudi Arabia thrived in Q2 2025, characterised by key trends. The demand for office space, especially Grade A properties in Riyadh, remains high, leading to rising rental rates and exceptionally high occupancy levels. The government's Regional Headquarters (RHQ) Program continues to drive demand, attracting international companies. The rise in the flex sector and the preference for smaller, efficient office spaces are also notable. Although a limited new supply in 2025 is expected to exacerbate the market dynamics, the outlook is positive, with increased supply anticipated in the coming years, along with strong performance in Jeddah. Looking at the Residential real estate market in Saudi Arabia significant growth and investment were witnessed in Q2 2025, particularly in Riyadh. Driven by strong demand, transaction volumes were substantial, with land sales leading the way. Government support and initiatives are actively promoting development and attracting both local and international investors. New project launches, such as Azure's Lamara project and ROSHN Group's ALDANAH community, alongside new investment funds, are fueling the sector's expansion and commitment to addressing the Kingdom's housing goals. CBRE pointed out that the Q2 2025 saw a dynamic retail sector in Saudi Arabia, marked by the rise of 'Retailtainment' and the expansion of entertainment hubs. The increasing integration of entertainment into malls and the substantial investments by Saudi Entertainment Ventures (SEVEN) are key drivers of this transformation, it stated. Despite a slight dip in sales during the Eid holiday, the sector is navigating challenges like oversupply and e-commerce through innovative projects and strategic adaptations. Stable rents and occupancy rates in super-regional malls and the addition of new developments are adding to the evolving retail landscape, it added. Significant developments in Saudi Arabia's Industrial and Logistics sector supported the country's economic diversification efforts in Q2 2025. CBRE pointed out that there was robust demand for warehousing despite challenges in finding immediately available, high-quality facilities. A major investment in a $7 billion cross-country rail corridor will enhance logistics capabilities, it stated. Average warehouse rents are increasing, reflecting strong demand. The launch of the Advanced Manufacturing and Production Center and collaborations like the one between Saudi Aramco Technologies and BYD are driving industrial transformation and innovation, it added. Matthew Green, Head of Research Mena, said: "This groundbreaking regulation marks a pivotal moment for Saudi Arabia's real estate market. By welcoming foreign investment, we anticipate a transformative shift, driving substantial growth in inbound capital over the next five years." "This will not only support the ambitious FDI targets but also stimulate private sector development, further diversify the non-oil economy, and generate wealth for landowners. Furthermore, it will foster long-term population growth and economic stability by enabling foreign residents to participate in homeownership, a significant social milestone," he added. Copyright 2024 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (
Arabian Post
2 hours ago
- Arabian Post
GCC IPO Market Sees Largest-Yet First Half, Despite Dip in Proceeds
Arabian Post Staff -Dubai GCC countries secured $3.4 bn from 24 initial public offerings in the first half of 2025, down 6% from $3.6 bn over 23 listings a year earlier, according to a report by Kuwaiti research firm Markaz. Saudi Arabia drove the surge, contributing $2.8 bn through 22 IPOs—an increase of 36% year‑on‑year—while the UAE and Oman saw more subdued performances. Oil‑price volatility, US tariff threats and global trade uncertainty weighed on market sentiment, but issuance volumes rose. The number of offerings edged higher to 24 from 23 in H1 2024, illustrating issuer appetite amid wider economic headwinds. ADVERTISEMENT Saudi listings captured 85% of the total proceeds, reinforcing its dominance in the regional IPO pipeline. The Kingdom raised $2.8 bn, up from $2.1 bn in the first half of 2024, with 22 issuances compared to 19 a year ago. The UAE saw a substantial 88% drop in IPO proceeds, with just one public offering—Alpha Data—raising $163 m in Abu Dhabi. Oman followed with the debut of Asyad Shipping Company, generating $333 m on the Muscat bourse. No IPOs were recorded in Kuwait, Qatar or Bahrain during this period. Sector analysis reveals the industrials segment led with $1.4 bn in proceeds, bolstered by Flynas and Asyad Shipping Company. Real estate followed with demand for development and construction offerings, while healthcare IPOs collected $505 m. Financial services and technology contributed $408 m and $204 m respectively. Performance after listing was mixed. Ten of the 24 companies saw positive returns by the end of June. Asyad Shipping led the pack, with its stock surging 835% since its March 12 listing. Umm Al Qura in Saudi Arabia recorded a 51% gain. On the downside, Hedab Alkhaleej, Dkhoun National Trading and Service Equipment fell by 30%, 27% and 26% respectively. Flynas edged slightly lower by 0.2%, despite an initial dip. Wider equity market performance across the region showed divergence. Kuwait's bourse rose 18.1% year‑to‑date, followed by Dubai, Abu Dhabi and Qatar, while Oman, Bahrain and Saudi Arabia retreated by 1.7%, 2.1% and 7.6% respectively. Geopolitical shocks—including renewed US tariff threats and oil price fluctuations— exerted pressure on national indices. On Monday, Saudi Arabia's Tadawul shed 0.2%, while Dubai, Abu Dhabi and Qatar all fell in the range of 0.3–0.5%. Investors are watching US inflation signals and Fed decisions closely, given the peg of Gulf currencies to the dollar. Despite softer proceeds overall, the strong issuance tally suggests issuers seized a narrow window before heightened uncertainty. A PwC analysis of Q1 showed GCC IPOs rose 33%, raising $1.6 bn from 11 deals, with Saudi Arabia capturing nearly 70% of that total. Looking ahead, Saudi Arabia is expected to maintain momentum, driven by privatisation efforts and a diverse pipeline of government-linked listings led by the Public Investment Fund. The UAE is projected to ramp up activity in industrials and tech, while Kuwait is implementing regulatory reforms to stimulate listings. Market analysts caution that global headwinds remain. PwC flagged how tariff announcements and macroeconomic instability continue to disrupt IPO sentiment globally. Within the GCC, sustained oil-price volatility and tightening monetary conditions add complexity. Nevertheless, Gulf capital markets have demonstrated resilience. Encouraged by diversified sector participation and healthy post-listing gains, policymakers and market participants appear poised to capitalise on remaining windows of stability.
