As part of the Vision 2030 strategy, as well as continued economic diversification efforts and job creation plans, the Kingdom of Saudi Arabia (KSA) has recently launched Project NEOM (‘NEO’ comes from the Latin word, meaning new, and the ‘m’ being an abbreviation of ‘Mostaqbal’, meaning future), a US$500 billion megacity project. With an area of about 26,500 sq.km. being allocated for the development, it covers three countries – Saudi Arabia, Egypt and Jordan. To put this into perspective, this equates to around 33 times the size of New York City.
The project was announced during the Future Investment Initiative in October 2017, and includes plans for resorts and holiday destinations along the Red Sea coast, as well as innovative, energy efficient and sustainable systems, buildings and infrastructures. This development is expected to create over 250,000 jobs and will contribute to KSA's GDP, which was expected to increase from 4.4% to 6.3% by 2020.
The development is backed by the Saudi’s Public Investment Fund (PIF). The PIF is a sovereign wealth fund owned by Saudi Arabia, founded in 1971 by royal decree to invest funds and provide financial support on behalf of the Government of Saudi Arabia, to projects of strategic significance to the national economy. It is expected that the PIF will provide the first capital investments for the project, enabling it to commence by 2019 and have a first phase completed by 2025.
The area is intended to be an international hub for trade, innovation and knowledge, and will focus on different industries including hospitality, entertainment, advanced manufacturing and biotechnology. Crown Prince Mohammed bin Salman has been explicit in his vision for this to be a world hub that is attractive for foreign funding. Investors from different sectors, including energy, water, biotechnology and robotics are expected to put more than half a trillion dollars into the region in coming years, and following the Kingdom’s announcement, Virgin founder Richard Branson has already expressed his intention to invest. Furthermore, the Russian Direct Investment Fund (RDIF) has expressed an interest in investing in this megacity.
The project’s primary focus is to turn 34,000km of Red Sea coastline into a luxurious tourist destination, and attract foreigners into the most conservative country in the GCC. NEOM will operate as an independent economic zone, with its own laws, tax structures and regulations, promoting economic growth and prosperity for its investors and residents. A number of promising initiatives relating to the project were announced in late 2017, which indicate that there is a marked intention for the region to become more liberal and open to Western norms. These include the Kingdom’s plan to issue its first tourist visas in 2018, the launch of entertainment projects such as theme parks, and the lifting of bans on women driving and public cinema. This approach, coupled with the intention to allow a mixed-gender working environment, will undoubtedly have a positive impact on a number of sectors, particularly tourism.
Once completed, this zone will offer an array of opportunities for local and international tourists, from exploring a nature reserve at the foothills of a dormant volcano nearby to scuba diving along the extensive coral reefs in the waters around the Red Sea at marine-orientated resort projects.
Ultimately, Project NEOM is considered to be highly progressive and very positive for Saudi Arabia, particularly in working towards its objective of diversifying the economy away from oil. The Kingdom is steadily gearing up towards attracting holidaymakers and investors alike, and has its sights set on potentially becoming one of the Middle East’s prime tourist destinations, as well as a global hub for innovation and trade.