Saudi Arabia embraces a different future with NEOM

Like the Aramco IPO in December, NEOM is one of the cornerstones of Saudi Arabia’s ambitious Vision 2030.

Sunday 23/02/2020
Land of the future. The site of NEOM in Tabuk province in north-western Saudi Arabia.(NEOM SAUDI)
Land of the future. The site of NEOM in Tabuk province in north-western Saudi Arabia.(NEOM SAUDI)

LONDON - Described as one of the most ambitious development projects in recent times, Saudi Arabia is to begin construction of its city of the future — NEOM — this year, said the project’s CEO, Nadhmi al-Nasr.

To be built in the Tabuk region of north-western Saudi Arabia on the Red Sea in an area nearly the size of Belgium, the $500 billion NEOM project is expected to be a cross between Silicon Valley, Dubai and Seychelles.

NEOM officials said the project will have more than 1 million people from around the world working and residing there. It is to include towns, ports, research centres, sports and entertainment venues.

Like the Saudi Aramco initial public offering in December, NEOM is a cornerstone of Saudi Arabia’s ambitious Vision 2030, an economic and social reform plan introduced in April 2016 to wean the kingdom off of its dependence on the energy sector while diversifying its economy, promoting private sector growth and supporting entrepreneurship.

The vision

The Wall Street Journal reported that when Saudi Crown Prince Mohammed bin Salman bin Abdulaziz, chairman of the Public Investment Fund, visited the area where NEOM is to be built a few years ago, he said he saw potential for a futuristic location to attract the “world’s greatest minds and best talents to the world’s best-paying jobs in the world’s most liveable city.”

Settling on the name NEOM, which is a combination of the Greek word for “new” and “mustaqbal,” the Arabic word for “future,” the project was announced. However, speculation about its scope and goals, which included technology yet to be developed, soon followed.

More than science fiction

Reporting about the project centred on robotic dinosaurs, artificial intelligence domestic help, glow-in-the-dark beaches and a giant artificial moon. However, what is at stake, as far as the kingdom is concerned, is more than novelty attractions because the megaproject is in line with the spirit of wide-ranging reforms Saudi Arabia has gone through in recent years.

Those changes included Riyadh, for the most part, defanging the Committee of Promotion of Virtue and Prevention of Vice — the “religious police.” New guidelines were issued stating that the committee would not be allowed to pursue people, demand to see identification or make arrests.

Saudi social reforms focused extensively on improving the status of women, who no longer need a guardian’s permission to go to college, find a job, start a business or travel. In June 2018, the long-standing ban on women driving was lifted. The World Bank’s Women, Business and the Law report recently ranked Saudi Arabia as “Top Reformer.”

Among fiscal reforms, the government cut energy and water subsidies, introduced a “sin tax” on tobacco products and sugary drinks and a 5% value added tax. To promote a domestic tourism industry and to generate local and international investment, officials established the Qiddiya entertainment megaproject in Riyadh in 2018.

NEOM, however, is the most ambitious project.

“NEOM will focus on nine specialised investment sectors and living conditions that will drive the future of human civilisation, energy and water, mobility, biotech, food, technological and digital sciences, advanced manufacturing, media and entertainment with liveability as its foundation,” Crown Prince Mohammed said in announcing the project.

“NEOM will be constructed from the ground up, on greenfield sites, allowing it a unique opportunity to be distinguished from all other places that have been developed and constructed over hundreds of years and we will use this opportunity to build a new way of life with excellent economic prospects,” he added.

Social challenges

Despite rapid changes in the country, Saudi Arabia is still a conservative society with some Saudis expressing an aversion to change. A Wall Street Journal report in 2019 stated that many issues plaguing the country before its reform drive were so entrenched in Saudi society that Crown Prince Mohammed said it would be easier to build a new city rather than to change existing ones.

Whether NEOM would have separate rules and regulations is unclear but the Wall Street Journal said international law firm Latham and Watkins, hired as a consultant on the project, said Saudi Arabia’s “religious-based justice system presented red flags” to foreign investors.

Documents seen by the Journal indicated that the legal structure in NEOM would see judges appointed by and reporting to the king and NEOM law would be based on best practices in economic and business law, as well as feedback from potential investors and residents.

Creating a buzz

The $500 billion price tag, to be covered by the Saudi Public Investment Fund, will not be enough for the 26,500 of the NEOM project to be completed. Saudi officials are looking for the remainder of the funding through foreign investment.

To generate buzz around the project, Riyadh has been hosting members of the international media, high-level executives from the international business community and social media influencers at the NEOM site.

Last December, the Saudi entertainment authority hosted a 3-day music festival that included Hollywood actors Armie Hammer and Ryan Phillippe and supermodels Alessandra Ambrosio and Irina Shayk. Dubbed the MDL Beast Festival, the event featured EDM superstars such as David Guetta, Martin Garrix and Tiesto.

“MDL Beast is more than just a festival,” said Saudi DJ, Ahmad Alammary, a member of the festival team, it is “a platform with multiple objectives including ongoing seasonal local and global events, online and radio channels, recording studios and a non-profit foundation promoting music education and therapy.”

Commenting on the event to his 1.2 million followers, Hammer said: “What I just witnessed was truly special. It felt like a cultural shift. A change. Like Woodstock in the 1960s.”

Saudi Arabia is the next big thing

Global employment agencies have noticed a surge in executives, particularly from the property industry, looking to relocate to Saudi Arabia.

Tom Watson, a partner at the international employment agency Michael Page Middle East, and Chris Rea, the firm’s Technology, Strategy manager for Saudi Arabia, said that was the case.

“The surge we are seeing with real estate executives entering the kingdom is due to the numerous giga-projects that form part of the wider Vision 2030,” they said in a statement.

“Candidates are very much buying into Vision 2030 and the giga-projects offer executives the opportunity to work on highly ambitious, cutting-edge developments in greenfield locations with huge natural beauty. It is giving people the opportunity to be involved in something that will leave a significant legacy.”

The Michael Page statement said that in Saudi Arabia there are early-stage projects, including the country’s eastern coast, which is starting to utilise the natural beauty of the Red Sea and capitalise on the tourism potential. Riyadh, through Qiddiya, Diriyah Gate and the King Abdullah Financial District, ensure a stream of opportunities for ex-pats to join early-stage development teams, the statement claimed.

With regards to the overall Gulf Cooperation Council (GCC), there are many interesting projects on the horizon, including in the United Arab Emirates where “major developers deliver high-quality developments in the residential, retail and mixed-use space and, of course, there is the extremely exciting and unique proposition of Expo 2020,” Watson and Rea said.

“The combination of continued high-profile developments in the UAE and the rise of an exciting range of developments being launched across Saudi Arabia bodes very well for the GCC region as a whole,” the statement added.