Saudi giga projects face recalibration amid trillion-dollar ambition

Saudi Arabia’s flagship development drive remains anchored to an ambition that exceeds $1 trillion in combined value, even as authorities adjust timelines, scope and sequencing across some of the Kingdom’s most high-profile projects. A new assessment by Fitch Ratings said the combined value of five major giga projects — NEOM, Qiddiya, Red Sea Global, ROSHN and Diriyah — is still expected to surpass that threshold at completion, underscoring the scale of the country’s long-term economic transformation plans.

The rating agency said contracts worth about $115 billion have been awarded across these projects since 2019, reflecting sustained execution despite tighter global financial conditions, cost inflation and a more selective approach to capital deployment. Construction awards have continued, though at a more measured pace, as project sponsors seek to balance fiscal discipline with delivery targets under Vision 2030.

Saudi giga projects recalibration tests execution resolve, a theme that has become increasingly visible as planners refine assumptions around demand, financing and phasing. NEOM, the largest and most complex of the developments, has been subject to the closest scrutiny. Originally conceived as a vast futuristic region spanning multiple sectors, it has undergone adjustments to prioritise core components, including the linear city The Line, industrial and logistics zones, and renewable energy infrastructure. Officials have maintained that recalibration is designed to improve efficiency and long-term viability rather than signal retreat.

Qiddiya, positioned as a global entertainment, sports and culture hub near Riyadh, has also seen phased rollouts emphasised over blanket expansion. Early focus areas include motorsports, theme parks and live entertainment venues intended to anchor domestic tourism and reduce outbound spending. Similarly, Red Sea Global’s luxury tourism developments have continued to move forward with a focus on high-end, environmentally sensitive offerings, supported by dedicated airport and hospitality infrastructure.

ROSHN, the national residential developer backed by the Public Investment Fund, remains central to efforts to expand home ownership and modernise housing supply. Its projects are less exposed to international tourism cycles, giving them a relatively stable demand base tied to population growth and urbanisation. Diriyah, centred on the historic birthplace of the Saudi state, continues to be promoted as a cultural and lifestyle destination blending heritage conservation with mixed-use real estate.

Fitch said the recalibration of some giga projects reflects a broader global trend in mega-developments, where sponsors reassess scale and timing in response to market signals rather than abandon long-term objectives. The agency noted that Saudi Arabia retains significant financial flexibility, supported by strong sovereign balance sheets and access to domestic and international capital markets, although pressures on oil prices and higher borrowing costs have encouraged closer scrutiny of capital allocation.

Contractors and suppliers remain closely tied to the Kingdom’s project pipeline. Engineering, procurement and construction firms from the Gulf, Europe and Asia continue to compete for packages, though competition has intensified as award volumes fluctuate year to year. Industry executives have pointed to longer procurement cycles and more detailed technical requirements as evidence of stricter oversight.

Economists say the giga projects play a dual role: acting as near-term economic stimulants through construction activity while reshaping the structure of growth over decades. The developments are intended to diversify revenue streams, create private-sector employment and attract foreign investment into sectors ranging from tourism and entertainment to advanced manufacturing and technology.

At the same time, analysts caution that execution risk remains elevated given the unprecedented scale and complexity of the programme. Labour availability, supply-chain resilience and coordination across multiple state-linked entities are persistent challenges. Environmental considerations, particularly for coastal and desert developments, add further layers of regulation and cost.