Saudi Arabia’s Neom Megacity Project Seeks Funding Through Islamic Bonds Amidst Rising Costs and Challenges

The Neom project, a $500 billion megacity project in Saudi Arabia, is looking to raise funds through the sale of Islamic bonds, known as sukuk. Led by Crown Prince Mohammed bin Salman as part of Vision 2030, the project aims to diversify the kingdom’s economy away from oil and into other sectors, including technology.

Neom’s centerpiece is The Line, a futuristic city within mirrored skyscrapers that aims to be sustainable and emissions-free. Other elements of the project include a sustainable port on the Red Sea, a ski and adventure resort, and a luxury island called Sindalha.

Despite most of the funding coming from Saudi Arabia’s sovereign wealth fund, PIF, there are concerns about rising costs and the need for additional funding to fully realize the ambitions of Vision 2030. As a result, the project has started borrowing to finance its development, reflecting the challenges of executing such large-scale projects.

The Neom project is one part of the larger Neom initiative in Saudi Arabia, which is led by Crown Prince Mohammed bin Salman as part of Vision 2030. The megacity project is set to issue its first bonds potentially raising up to $1.3 billion to fund its development.