Saudi Arabia is preparing to significantly scale back and redesign Neom, its flagship megaproject on the Red Sea coast, marking a major reset for one of the most ambitious developments ever announced by the kingdom.

The rethink follows years of delays, cost overruns and mounting scepticism around the original vision. According to people familiar with the plans, Crown Prince Mohammed bin Salman, who chairs the project, now supports a substantially smaller and more pragmatic version of Neom, reflecting a growing willingness within Riyadh to reassess its most ambitious initiatives.

Neom spans a vast area roughly the size of Belgium and was unveiled in 2017 as a centrepiece of Saudi Arabia’s push to diversify its economy away from oil. Its most high-profile element, The Line — a futuristic linear city originally planned to stretch 170 kilometres inland — is expected to be radically scaled back once again as part of the redesign.

Rather than pursuing the original science-fiction scale, the revised plans are expected to focus on more conventional economic activity, with Neom increasingly positioned as a hub for data centres and digital infrastructure. Its coastal location offers access to seawater cooling, while the availability of land and renewable energy aligns with Saudi Arabia’s ambitions to become a global player in artificial intelligence and data services.

The shift comes at a time when Saudi Arabia is tightening its financial priorities. After a decade of heavy spending, liquidity has come under pressure, oil prices remain relatively subdued, and the kingdom faces costly commitments ahead of hosting the Expo 2030 and the football World Cup in 2034.

A year-long internal review of Neom, launched after a leadership change in late 2024, is expected to conclude by the end of the first quarter of this year. That process has already prompted decisions to scale back other components of the development, including Trojena, the planned mountain resort that will no longer host the Asian Winter Games as originally intended.

While Neom has long been a magnet for global consultants, architects and construction firms, progress slowed sharply after tens of billions of dollars had already been committed. The redesign is expected to make greater use of existing infrastructure rather than pursuing entirely new large-scale builds.

Saudi officials have previously indicated that no project is immune from cancellation or revision if it no longer serves the national interest. With Neom owned by the Public Investment Fund — which itself is under pressure to demonstrate returns — the project’s transformation signals a broader recalibration of Saudi Arabia’s economic strategy, favouring delivery and viability over spectacle.