Image Courtesy: NEOM

Saudi Arabia’s sovereign wealth fund is scaling back and slowing the development of its futuristic Neom megaproject as it places greater emphasis on profitability and commercially viable investments.

The Public Investment Fund (PIF), chaired by Crown Prince Mohammed bin Salman, said Neom’s ambitions remain intact but that its major developments will now be delivered in stages. The shift follows years of delays, rising costs and growing questions over the feasibility of some of the project’s most ambitious plans.

In its 2025 annual report, the PIF said projects including The Line, Oxagon, Trojena, Magna, the Nature Region and the Islands of Neom would move toward a phased development model. The fund said priority would be given to projects that demonstrate commercial sustainability and financial resilience.

The change represents a significant adjustment for The Line, a proposed 112-mile-long linear city that was once presented as one of the centerpiece projects of Saudi Arabia’s Vision 2030 transformation. The development had been projected to cost around $1 trillion, with substantial funding expected from private investors and foreign capital.

Saudi Arabia has struggled to attract the level of outside investment originally envisioned for Neom. The kingdom has also abandoned plans to host the 2029 Asian Winter Games at Trojena, a planned mountain resort that was expected to use artificial snow.

The project has faced further disruption following the departure of workers from parts of the construction site. Neom’s leadership also changed after former CEO Nadhmi Al-Nasr was dismissed in 2024. His successor, Aiman Al-Mudaifer, has reportedly taken a more restrictive approach to spending.

The PIF now says Neom will focus on areas including artificial intelligence, logistics and clean energy. Artificial intelligence infrastructure, including data centers, has emerged as a potential new priority as Saudi Arabia seeks to position itself as a regional technology hub.

The broader strategy appears designed to preserve the kingdom’s long-term economic ambitions while reducing exposure to projects that may take decades and enormous sums of money to complete.

The PIF reported a 5.8 percent total shareholder return for 2025, while revenue increased 9 percent to $120 billion and net profit more than doubled to $17 billion.

Saudi Arabia still intends to transform its oil-dependent economy into a major financial, tourism and investment center. But the latest changes suggest that some of Neom’s most ambitious visions will now face a more commercial test before they move forward.