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Sindalah island in NEOM – Image Credit NEOM
Terence Baker of CoStar reports that the ambitious development projects under Saudi Arabia’s Vision 2030 have encountered a slowdown, as the nation reassesses its economic diversification strategies amidst fluctuating oil prices and increased costs.
Saudi Arabia’s Vision 2030 was introduced to diversify the economy beyond its dependence on oil. Central to this vision are the “giga-projects,” which include the construction of new cities and tourist destinations designed to be sustainable and innovative. These projects are backed by the Saudi Public Investment Fund and are intended to transform the country’s economic landscape.
Current Status of Giga-Projects
The rollout of these giga-projects has slowed, with several developments being reevaluated or extended. The planned city of Neom, for instance, is undergoing revisions to its blueprint due to escalating costs and economic considerations. Edward James from MEED highlighted this trend during a recent webinar, noting that the contract phase for many projects will resume after these reassessments.
Investment Trends in the GCC
Across the Gulf Cooperation Council (GCC) countries, which include Saudi Arabia, UAE, Qatar, Oman, Bahrain, and Kuwait, the overall value of development projects has decreased. In 2025, the GCC’s contract value is projected at $220 billion, down from $261 billion in 2023 and $298 billion in 2024. Saudi Arabia has seen a significant decline, with contract values dropping from $125 billion in 2023 to a projected $77 billion in 2025.
Impact on Saudi Arabia’s Tourism and Hospitality Sector
Despite the slowdown in giga-projects, tourism remains a priority for Saudi Arabia. The country’s hotel industry continues to expand, with new hotels and rooms being added to accommodate future events such as the Asian Football Championships 2029 and FIFA World Cup 2034. However, spending on hospitality projects has decreased, with investment falling from $34.6 billion in 2023 to an estimated $11 billion in 2025.
Challenges and Economic Factors
Several factors contribute to the slowdown, including cost inflation, lower-than-expected foreign investment, and challenges in project delivery. The price of oil, although better than anticipated, remains a critical factor influencing these projects. Additionally, the complexity and scale of projects like Neom’s “The Line” have led to reevaluations of their cost-benefit ratios.
Infrastructure Developments for Upcoming Events
Saudi Arabia is investing in infrastructure to support upcoming major events. Projects include the Riyadh Line 2, the Saudi Landbridge railway, and metro systems in Jeddah and Makkah. These developments are crucial for the country’s future transportation needs and are aligned with its broader economic goals.
Future Outlook for Giga-Projects
While some projects, such as Diriyah and Roshn, are progressing, others face extended timelines due to their sheer scale and complexity. For instance, Neom’s projects are not being canceled but are expected to take longer to complete. This extended timeline reflects the challenges of executing such large-scale developments.
Discover more at CoStar.
