End of The Line: how Saudi Arabia's Neom dream unravelled | FT #shorts

Key Concepts

• The Line: A proposed linear city in Saudi Arabia's NEOM project, envisioned to house 9 million residents.
• NEOM: A futuristic mega-project in Saudi Arabia, aiming to build a new urban area.
• Public Investment Fund (PIF): Saudi Arabia's sovereign wealth fund, the primary financial backer of NEOM.
• Technical Feasibility: The possibility of constructing a project based on current engineering and technological capabilities.
• Ambitious Schedule: Aggressively tight deadlines for project completion.
• Material and Labor Requirements: The immense quantities of resources and workforce needed for construction.
• Cost Estimates: Projections of the financial expenditure for the project.
• Private Investment: Funding from non-governmental entities.
• Liquidity: The availability of cash or easily convertible assets to meet short-term obligations.

Project Status and Scale

The construction of "The Line," a central component of Saudi Arabia's NEOM mega-project, is reportedly grinding to a halt. Originally intended to house 9 million residents, sources indicate it may never accommodate a single one. The scale of "The Line" is described as colossal; if placed in central London, it would be taller than The Shard and extend all the way to Birmingham.

Reasons for Project Delays and Potential Failure

Architects and engineers who have worked on "The Line" acknowledge its technical feasibility but cite several critical reasons why they believe it will not be built as planned:

1. Ambitious Schedule:

   • Original Target: NEOM suggested residents would begin moving in by the end of 2024.
   • Projected Occupancy (2025): Plans aimed for 130,000 residents and 1 million tourists.
   • Methodology: To meet these deadlines, foundational work commenced before the full design and costing of the building were finalized.

2. Sheer Quantity of Materials and Labor:

   • Modular Design: The 170 km long "The Line" is divided into 135 modules.
   • Concrete Requirement: A single engineer estimated that just 20 modules would necessitate a yearly concrete supply equivalent to France's annual output.
   • Steel Requirement: Another worker stated that approximately 60% of the world's recycled steel would be needed.
   • Labor Force: An estimated 300,000 to 500,000 workers would be required to complete "The Line."

3. Cost:

   • Difficulty in Pinpointing Costs: Exact figures are elusive due to reliance on numerous assumptions.
   • Budget Evolution: Executives were reportedly informed of a $1.6 trillion budget for "The Line" in late 2021.
   • Later Estimate: A cost estimate conducted a few months later placed the figure at around $4.5 trillion.

4. Lack of Private Investment:

   • Primary Reason: Given the project's scale and complexity, private investors have largely declined to support its development.
   • Financial Burden: This has left Saudi Arabia's Public Investment Fund (PIF) as the sole financial backer.
   • PIF Liquidity Issues: A recent slump in oil prices has reportedly strained the PIF's liquidity.
   • Conclusion: Without securing additional private investment, concerns about the project's completion are significant.

Conclusion

The construction of "The Line" within NEOM faces substantial challenges, primarily stemming from an overly ambitious timeline, the immense logistical demands for materials and labor, escalating costs, and a critical lack of private sector funding. The reliance on Saudi Arabia's PIF, which is experiencing liquidity constraints due to falling oil prices, raises serious doubts about the project's viability and completion as originally envisioned.