Saudi Minister calls NEOM Gigaproject a 'generational investment'

Saudi Arabia’s ambitious NEOM gigaproject, a futuristic region under construction in the desert, is described as a “generational investment” with a long-term timeline, according to the country’s Investment Minister Khalid Al-Falih. Speaking at the World Investment Conference in Riyadh, Al-Falih emphasized that NEOM’s investment potential is designed to unfold over decades, not years.

“NEOM was not meant to be a two-year investable opportunity. If anybody expected NEOM to be foreign investment in two, three or five years, then they have gotten (it) wrong — it’s a generational investment,” he said.

Highlighting NEOM’s progress, Al-Falih added, “The flywheel is starting and it will gain speed as we go forward, as some of the foundational assets come to the market.”

NEOM is central to Saudi Arabia’s Vision 2030 economic transformation agenda, which aims to reduce reliance on oil revenues. This $925 billion project, funded largely by the Public Investment Fund (PIF), envisions a Red Sea urban and industrial region nearly the size of Belgium, designed to house 9 million residents. However, the project has recently scaled back some ambitions to focus on priorities like hosting global sporting events amid rising costs.

Asked about the recent departure of NEOM’s chief executive Nadhmi Al-Nasr, Al-Falih remarked, “The executive had done ‘a respectable job’ but that ‘there is a time for everybody to pass on the baton.’”

Regarding the balance between PIF and foreign investment in funding NEOM, Al-Falih explained, “I think foreign investors are starting to come to NEOM, they’re starting to channel capital. Some of the projects that the PIF will be doing will be financed through global capital pools, through some alternative and private capital. That’s taking place as we speak.”

He further urged stakeholders not to view the funding strategy as binary.

“So I urge you not to look at NEOM as being 100 percent PIF and then suddenly there will be a cliff and it will go private.”

Saudi Arabia is targeting $100 billion in annual foreign direct investment by 2030, having achieved about 25 percent of that in 2023. Co-investment deals between state entities and foreign investors are on the rise, reflecting increasing global interest in the kingdom’s projects.

“It’s always been the intent,” Al-Falih said of the foreign inflows. He acknowledged that while some foreign investors remain cautious, many are gaining confidence. “The risk-return trade-offs are very, very fair and positive to them,” he added.