The Scoop
Saudi Arabia’s NEOM is considering significantly cutting its workforce and relocating more than 1,000 employees to Riyadh as the kingdom tries to control costs and improve oversight of the vast new city and other developments being built on its northwestern coast, according to people familiar with the matter.
The relocations, which may start later this year, would reverse NEOM’s former Chief Executive Nadhmi Al-Nasr’s policy that staff be based on the barren construction site, the three people said. Employees who will be moved to the capital are expected to lose benefits including housing and meals that were provided at NEOM due to the site’s remote location, the people said, resulting in a de facto pay cut.
More than 1,000 staff may also be laid off in the restructuring, according to the people. No final decisions on the overhaul have been made and the plans could still change, the people said.
The Public Investment Fund — Saudi Arabia’s $1 trillion sovereign wealth fund — established NEOM as a company to develop the eponymous region and so far has been providing the funding for its construction. NEOM includes a cluster of projects: the main development known as The Line, mountaintop resorts, tourism islands, and an industrial district connected to a port.
NEOM and PIF declined to comment.
Know More
PIF launched an audit of the project after Al-Nasr’s departure late last year and the brief opening of Sindalah, the luxury $4 billion Red Sea island intended to showcase NEOM’s potential and prove to skeptics that the wider project was progressing. But after a glitzy launch party in October, Sindalah was shut down and its fate is uncertain.
NEOM moved its headquarters to northwest Saudi Arabia in 2020, forcing staff to relocate to what was then — and, except for the people actually working on it, largely still is — a remote and mostly uninhabited site. Employees were put up in temporary cabins and provided round-the-clock canteens, gyms, and schools. The cushy lifestyle broke through in viral videos last year, with residents showing off the camps, to the chagrin of management.
The company already has Riyadh offices, which are set to expand under the current proposals.
Early stage work on The Line, twin mirrored skyscrapers intended to stretch for 170 kilometers (106 miles), has been underway for several years, although focus has shifted to completing a smaller part of the towers by 2030. The industrial city and port known as Oxagon is progressing along with one of the world’s largest green hydrogen plants. NEOM is also building Trojena, which will host the Asian Winter Games 2029.
Mike Cheung, the head of audit at PIF, has been spending more time in NEOM to lead a review of progress and spending. Concentrating NEOM’s staff in Riyadh is also seen as a way for PIF to strengthen oversight, the people said. Al-Nasr said last year that NEOM employed around 5,000 full-time staff from 100 countries including Saudis, Europeans and Americans. A further 140,000 additional contractors were also working on the site, Al-Nasr said at the time.
Saudi Arabia is also looking to hire a consultant for a “strategic review” of The Line, the futuristic linear city intended to be at the core of NEOM, Bloomberg reported this week.
Step Back
When NEOM was announced in 2017, it was set to be the centerpiece of efforts to diversify Saudi Arabia’s oil-dependent economy and bring in foreign investment. Initial cost estimates were $500 billion. That figure has ballooned to $1.5 trillion as its scale and the kingdom’s ambitions grew.
New initiatives have also since emerged, such as hosting World Expo 2030 in Riyadh and the men’s soccer World Cup in 2034. Preparing for these events — both awarded after NEOM’s launch — is now the priority.
PIF appointed Aiman Al-Mudaifer as acting CEO of NEOM after Al-Nasr’s departure, and he took on the role full time in May. In that time he has launched a wide-ranging review of the scope and priority of projects under development by the company, the Financial Times reported in April. He was previously head of the local real estate investment division at the wealth fund since 2018.
Notable
- NEOM has significantly scaled back plans for how much its centerpiece The Line will be completed by 2030, according to Bloomberg. The linear city had aimed to house 1.5 million people by then, but is now targeting 300,000 residents.
- Saudi Arabia will need to accelerate construction hugely to complete The Line by its stated deadline, according to industry publication New Civil Engineer, which used Google Earth satellite images and experts to make the assessment.