2 days ago
Huge update on Saudi Arabia's skyscraper 'utopia'
Saudi Arabia is drawing a line in the sand under the soaring costs of its ambitious 'Line' skyscraper gigaproject.
It's a building project worthy of the kings of ancient Persia: A 170km long mirrored skyscraper cutting a swathe through the Tabuk Desert in northwestern Saudi Arabia.
The great residential wall is Crown Prince Mohammed bin Salman Al Saud's flagship project. It's supposed to define a future beyond the nation's dependence on crude oil.
It's about technology. It's about architecture. It's about a new way of life.
It's also about tourism, manufacturing and surveillance. Not to mention housing the world's richest and most ambitious in a glistening technocratic utopia.
The project was first announced in 2021.
Since then, billions of dollars have been spent on moving mountains of sand in preparation for laying the foundations of the much-hyped 'ecologically sensitive' city.
But there are problems.
Oil prices have remained stubbornly low. But costs keep spiralling.
And that's introduced Saudi Arabia to something new: a tight national budget.
Neom's new chief executive officer, Aiman Al-Mudaifer, has hired some of the world's most expensive consulting firms to engage in a strategic review of the gigaproject.
Is it viable? Is it practical?
What can be done to rein in costs?
In April, financial consultancy Goldman Sachs told its clients that Saudi Arabia was facing 'pretty significant' budget deficits. Now, a new Bloomberg report says consultants have been hired to propose potential cost-cutting changes to the gigaproject's design.
But this is the Crown Prince's Vision 2030 plan. He gets a royal veto.
A matter of scale
The Line's chief operating officer, Giles Pendleton, is upbeat about progress: 'THE LINE is taking shape at an incredible pace and something I'm incredibly proud of,' he posted to social media.
But Crown Prince Mohammed bin Salman wants 1.5 million people living inside his glittering city by 2030.
It was always an ambitious goal.
Only 2.5 km of the 170 km long structure is currently under construction. Once completed, it will be capable of housing some 300,000.
Now, even that appears to be overly ambitious.
The Financial Times reported in April that a 'comprehensive review' of the project had been initiated amid fears the centrepiece of the Line's first segment – the NEOM stadium – wouldn't be ready in time for the 2034 FIFA World Cup.
So can the world's top consultancy firms save the day?
Initial ideas include reducing its proposed height to 500m, further shortening the length of the first component, and abandoning its proposed iconic mirrored exterior.
But whether or not any of these recommendations are adopted is a matter of royal prerogative.
The Line, as with the remainder of the NEOM desert technohub concept, is widely regarded as the Crown Prince's vanity project.
'We need to transform the concept of a conventional city into that of a futuristic one,' he stated during the gigaproject's launch. 'Today, I present to you The Line … that preserves 95 per cent of nature within NEOM, with zero cars, zero streets and zero carbon emissions.'
It's about status.
It's about making a personal mark on history.
The Crown Prince wants to build the world's largest building (the Mukaab), the world's tallest skyscraper (the 1km high JEC Tower), and a series of spectacular (and landscape-changing) desert holiday resorts.
No matter the cost.
So far, that's been about $A77 billion.
Income versus expenditure
'There's nothing ordinary about building THE LINE and nothing ordinary about the people bringing it to life,' Pendleton boasts.
The potential total bill for the entire NEOM gigaproject has been calculated at $A2.5 trillion.
And there are also allegations that it has already cost 21,000 construction worker lives.
Now, labour is getting more expensive.
And Saudi Arabia's budget, to which oil still contributes about 61 per cent, is suffering under the global shift toward renewable energy.
With oil prices lingering at about $US70 a barrel, the Crown Prince's expectations may have to be curtailed.
Analysts say Saudi Arabia needs oil prices to be consistently above $US100 a barrel if it is to have any chance of paying for the building projects.
That's looking increasingly unlikely.
Russia has been dumping its oil on international markets in sanction-busting 'dark fleet' moves. And other OPEC+ nations have been less than willing to participate in price-raising production cuts.
So Saudi Arabia in April accused Iraq and the United Arab Emirates of 'cheating', and announced an increase to its own output.
This further puts downward pressure on international oil prices.
The Line was projected to contribute $75 billion to Saudi Arabia's national budget by 2030, providing approximately 380,000 full-time and high-tech jobs.
