The one Neom project that’s actually happening: an absurdly gigantic palace

[ResidentialBusiness]

Neom, the insane urban development project in Saudi Arabia, appears to be sinking faster than the giant holes they keep digging in the middle of nowhere. Increasing delays and soaring cost overruns have led to project cancellations and a general scaling back of the original vision. Now a Wall Street Journal report has uncovered an internal audit that reveals evidence of deliberate manipulation of finances by management to justify rising cost estimates to investors. The sense of impending disaster is even more shocking when you look at the only crazy structure that is now standing in Neom: an unbelievably giant palace.

New satellite images obtained by Business Insider via US space company Maxar Technologies have revealed the gigantic complex, which appears to feature at least 16 buildings (plus other buildings in the property), four swimming pools, private beaches, extensive gardens, a marina, 10 helipads, and its own golf course. The palace is thought to be owned by Saudi Arabian ruler Mohammed bin Salman, and it’s only one of five palaces that will be built for the royal family in the 10,230-square-mile region known as Neom. 

The development of Neom is supposed to become Saudi Arabia’s transitional path from an oil economy towards one based on technology, advanced manufacturing, green energy, and tourism. It includes a 110-mile-long “vertical city” called the Line—which has since been scaled back to just over one mile—along with other futuristic settlements that will allegedly include everything from hydrogen processing plants to luxury hotels. 

Bin Salman chairs the boards of Neom and its sub-projects, frequently approving architectural choices seemingly impossible to build, like this giant 30-story-high chandelier conceptualized by a Marvel concept artist because, reportedly, the Prince likes The Avengers.

Fraud is in the air

These lavish personal palaces and flashy renderings offer a stark contrast to the financial reality of the project. Initially, its promoters were looking to attract $500 billion in public and private capital, but Neom is reportedly having a hard time getting the money. The delays and cost overruns kept mounting and, in 2024, bin Salman fired Neom’s CEO of six years, Nadhmi al-Nasr, putting in a new team tasked with turning the project around in place.

Now the WSJ has uncovered an internal audit that reveals evidence of deliberate manipulation of finances by management to justify rising cost estimates. Capital expenditure for building Neom to its “end-state” by 2080 was estimated at $8.8 trillion, more than 25 times the annual Saudi budget. According to the paper, the high costs due to the remote location, ambitious design, and unrealistic projections seem insurmountable, despite executives hiding rising costs by inflating profit assumptions. The audit shows that the crown prince encouraged Neom to use the internal rate of return (IRR) to assess project profitability, leading to concerns about the project’s financial viability. Then revenue estimates were increased to cover cost overruns, leading to a higher internal rate of return.

Along the way, the Neom staff suggested a few cost-cutting measures, like reducing the height of The Line, but the crown prince rejected this. He ordered to find cost savings elsewhere. And when a project manager challenged the unrealistic cost estimates, he was removed. The WSJ reports that McKinsey helped create financial models, validated projections, and served as both planner and validator, raising potential “conflicts of interest.”

Despite the audit findings, a Neom spokeswoman told the WSJ that the project remains on track and is demonstrating tangible progress. On social networks and YouTube, the organization and its top brass keep posting videos claiming progress. I follow them. They always look like the same holes in the middle of nowhere.

We won’t have to wait long to see if the Prince and his organization can actually realize these pharaonic visions or if they will just end digging the most expensive hole in history. The Line’s first phase is supposed to open its first half-mile section, including a stadium, in 2034. Just nine years away. That will be the year the World Cup starts in Saudi Arabia, right in that stadium.

No matter if it gets finished on time or not, I’m sure bin Salman will be watching the kick off game from one of the hundred (I’m guessing given its size?) living rooms in his cozy new palace.

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