Financing NEOM is the next big move

A handout picture provided by Saudi's NEOM on July 26, 2022 shows the design plan for the 500-meter tall parallel structures, known collectively as The Line, in the heart of the Red Sea megacity NEOM. (AFP)
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Updated 02 August 2022
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Financing NEOM is the next big move

  • The immense project has captured the hearts and minds of Saudi investors who are patiently waiting to be part of history

RIYADH: As NEOM’s The Line designs have been revealed, the focus is now shifting to funding the development.

“The planned funding of NEOM’s ambitious The Line project is also on a truly epic scale,” according to London-based economist and former King Fahd University of Petroleum and Minerals Prof. Mohamed Ramady. 

The crown prince’s bold proposals aptly underscore what NEOM is all about, that all of humanity, not only Saudi Arabia will benefit from.

Mohamed Ramady, London-based economist.

“It will not be an easy task as global investors will have to be satisfied with the different NEOM project viabilities, execution timescales and acceptable rates of return,” he told Arab News.

Investors will take into account the premium pricing for such new ventures and risks, future inflationary cost increases as well as higher interest rates, he added.

The project’s masterminds are already aware of the challenges and what is needed to bring in investors. 

Talking to reporters on July 25, Saudi Crown Prince Mohammed bin Salman revealed investments for NEOM’s first phase could reach SR1.2 trillion by 2030.

He also acknowledged that NEOM’s capital will come from sovereign wealth funds, initial public offering, and international private investors, adding this will be the main challenge to overcome in the next two years.

The Crown Prince also made clear the project will depend on government support until 2030 with an additional SR200 to SR300 billion in state funding, in addition to the investments the Public Investment Fund will put in the project.

Work on the internal rate of return is still going on, he said, adding it will be between 9 and 16 percent.

“The Crown Prince noted that eventually the source of funding will be from private sector and IPO proceeds of the PIF entities, which will also help Saudi stock market to achieve a global dominance, with SR5 trillion in new IPO proceeds from NEOM surpassing the mega Aramco IPO,” Ramady added.

In addition, Ramady said that international contractors might participate in NEOM on a BOT basis — build, operate and transfer model — while hedge funds and other sovereign wealth funds will be key funding partners, “especially those with long-term Saudi risk appetite and confidence in the Kingdom's non-oil economic transformation.”




Faisal Durrani

“Indeed, nearly one in five Saudis would like to live in NEOM,” he said.

Faisal Durrani, partner and head of Middle East Research at Knight Frank

Yet there is optimism building around the project.

Faisal Durrani, partner and head of Middle East Research at Knight Frank, told Arab News that attracting this level of investment will rapidly unlock NEOM’s development schedule. 

“The immense project has captured the hearts and minds of Saudi investors who are patiently waiting to be part of history. Indeed, nearly one in five Saudis would like to live in NEOM,” he said. 

“The bold vision of Saudi is unfolding rapidly and plans for NEOM’s multi-billion dollar IPO will help to cement the Kingdom’s spectacular vision in the minds of the global investment community,” added Durrani.


Using space science to protect Saudi Arabia’s environment

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Using space science to protect Saudi Arabia’s environment

  • Kingdom is harnessing satellite technology to forecast disasters, boost agriculture

RIYADH: Learning space science has delivered significant environmental benefits worldwide, helping many countries better understand and manage climate challenges. 

Saudi Arabia is now taking steps not only to explore the galaxy but also to invest in future generations who can apply space science to pressing environmental issues at home.

Last November, the Space Academy, part of the Saudi Space Agency, launched a series of seminars designed to enhance knowledge and develop skills in space science and technology, with a particular focus on Earth observation.

Running for nearly a month, the program formed part of a broader strategy to nurture national talent, raise scientific awareness, and build data capabilities that support innovation and research across the Kingdom.

Developing space sector can eventually help reduce some of the critical climate issues such as drought and air pollution. (AFP)

As efforts to strengthen the sector continue, important questions remain: How can space science translate into tangible environmental benefits? And how large is the global space economy?

In an interview with Arab News, Fahad Alhussain, co-founder of SeedFord, highlighted the scale of the opportunity and its environmental impact.

“To be frank, the slogan that we always use in space is that ‘saving the Earth from the space.’ It is all about this,” Alhusain told Arab News.

“You can recall a lot of related environmental issues like global warming, related to forests, related to the damage that happens to the environment. Without space, it would be almost impossible to see the magnitude of these damages.”

According to Alhussain, satellites have transformed how experts observe environmental changes on Earth, offering a comprehensive view that was previously impossible.

“By collecting data and using satellites… You can better analyze and measure so many things that help the environment,” said Fahad Alhussain. (Supplied)

He said that “the transformation of technology allows even the non-optical ways of measuring, assessing, and discovering what is going on in the environment … you can even anticipate fire before it happens in the forest.”

“You can detect the ice-melt down, you can get huge amount of information and can see it through the weather maps…there is a huge section in the economy for the environment,” Alhussain commented.

A 2022 report by Ryan Brukardt, a senior partner at McKinsey & Company, published by McKinsey Quarterly, found that more than 160 satellites currently monitor Earth to assess the impacts of global warming and detect activities such as illegal logging.

Brukardt cited NASA as an example of how advanced satellite tools are used to track environmental changes, including shifts in ocean conditions, cloud cover, and precipitation patterns. He also noted that satellite data can help governments determine when immediate action is needed, particularly in response to wildfires.

FASTFACT

Did You Know?

  • Satellites collect massive amounts of data, and AI is used to help interpret this information more efficiently and predict future outcomes.
  • The global space economy surpassed $600 billion in 2024 and is projected to exceed $1 trillion by 2030.
  • Saudi Arabia has established three key entities: the Supreme Space Council, the Saudi Space Agency, and the Communications, Space, and Technology Commission.

Beyond disaster response, satellites offer vital insights for agriculture. According to Brukardt’s report, scientists can use space-based data to monitor crop development and anticipate threats to harvests, such as drought or insect infestations.

These wide-ranging applications explain the rapid growth of the global space economy. 

According to World Economic Forum research, the sector is projected to reach $1.8 trillion by 2035, nearly tripling from $630 billion in 2023.

A deeper understanding of space and its applications offers Saudi Arabia, and the world, better tools to anticipate climate challenges, protect ecosystems, and safeguard biodiversity. (Supplied)

For Saudi Arabia, expanding space science capabilities could help address the country’s arid conditions by monitoring desertification and identifying sources of air pollution. Early detection of droughts, heatwaves, and crop stress could support more effective environmental planning and response.

Space-based data could also play a critical role in tracking environmental changes in the Red Sea and surrounding coastal ecosystems, strengthening marine conservation efforts and supporting the Sustainable Development Agenda.

As Alhussain emphasized, advancing knowledge in space science and satellite technology enables experts to measure environmental damage accurately and predict disasters before they occur, allowing for more effective responses.

By investing in space science education and research, the Kingdom can build national expertise, strengthen environmental protection policies, enhance food and water security, and contribute to global efforts to combat climate change—while also benefiting from the rapidly expanding space economy.

Ultimately, a deeper understanding of space and its applications offers Saudi Arabia, and the world, better tools to anticipate climate challenges, protect ecosystems, and safeguard biodiversity.

“By collecting data and using satellites, you can better analyze and measure so many things that help the environment,” said Alhussain.
“There will be patterns where you can warn people, scientists and decision makers to do something about it.”