In an effort to realize Saudi Crown Prince Mohammed bin Salman’s visionary project, the $1.5 trillion Neom city, the kingdom is planning its debut riyal bond sale. Despite boasting the world’s largest sovereign wealth funds, with estimated total assets of nearly $776 billion, Saudi Arabia is exploring new avenues for funding the futuristic Neom. With several multi billion-dollar construction projects underway, including The Line, Sindalah, and Trojena, along with a series of recently announced luxury developments, there is a noticeable cash crunch.
Talks of scaling back The Line or implementing phased construction have emerged. According to Bloomberg, Neom has appointed banks such as HSBC Holdings Plc, Al Rajhi Bank, and Saudi National Bank’s securities units to manage the sale of Islamic bonds, or sukuk. The debt will be denominated in the local currency and could raise as much as 5 billion riyals or $1.3 billion.
While this funding is insufficient, it will expedite the completion of ongoing projects, particularly as the sukuk sale is expected to occur as early as the second half of 2024.
‘Discover Neom’ a roadshow that showcases the projects to potential investors has also reached China. Along with investment opportunities they also held a forum with Chinese construction companies to explore their interest in the construction projects of the megaproject. According to Neom officials the highlight of the event was an immersive experience that explored ‘The Line’.
Neom City’s centerpiece is The Line, consisting of a pair of skyscrapers stretching 170 kilometers. Additionally, it will feature an industrial port called Oxagon, the sea-horse shaped Sindalah, and the year-round ski-village Trojena. Bloomberg reports that Neom recently secured a 10 billion-riyals loan from a group of Saudi banks, and the project’s developers have raised another 3 billion-riyal loan to finance Sindalah in the Red Sea.
Despite delays, challenges, and detractors, there is significant foreign interest in purchasing property in MBS’ dream project, ‘The Line.’ The visionary Crown Prince remains undeterred, with plans to make Neom City a reality by 2030 by mobilizing an army of 200,000 skilled workers to accelerate construction across the sites by next year.
