Saudi Arabia's $500 Billion Megaproject Crashes and Burns

Saudi Arabia's ambitious Trojena ski resort project has effectively collapsed due to escalating costs and unrealistic projections. The project, part of the $500 billion NEOM megaproject, aimed to create a futuristic mountain village with skiing facilities in an arid region where natural snow is scarce.

The Wall Street Journal reports that people inside the project warned about the 'astronomical' costs of building a ski resort from scratch. Construction began in 2023, but the financial strain became too great to ignore. The economics of the megaproject were increasingly difficult to ignore, and what ultimately ended the project was the financial cost.

The NEOM megaproject, announced in 2017 as part of Saudi Crown Prince Mohammed bin Salman's Vision 2030 program, aimed to diversify the Saudi economy beyond oil. The project was initially presented as a roughly $500 billion futuristic development covering over 26,000 square kilometers in northwestern Saudi Arabia.

The internal culture surrounding NEOM, including Trojena, was described by WSJ journalist Eliot Brown as a 'dance of mutual delusion.' With the Crown Prince at the helm, honesty about the project's feasibility and financial viability became impossible. The incentives ran the other way: keep the project moving, keep the projections optimistic, and hope the gap between ambition and reality could be closed later.