The pace of investment in developing vast swaths of Saudi Arabia as part of its Vision 2030 ambitions has slowed so far this year.
Years ago, Saudi officials and the country's sovereign wealth Public Investment Fund unveiled a massive development plan to build more cities and tourist areas along Saudi Arabia's Red Sea coast. With the investment, officials hope Saudi Arabia can grow its economy beyond its dependency on oil. The development of these "giga-projects" are also meant to produce sustainable, near carbon-neutral urban cities with innovations in infrastructure and real estate design.
But the giga-projects rollout has stalled as costs grows, the price of oil remains low and the Saudi government and its sovereign wealth fund reevaluate their priorities. Some projects such as the planned city of Neom look as though some aspects of their blueprints need to be reined in. But the contract phase will restart in earnest following reevaluations, said Edward James, head of content at business advisory MEED, during a webinar focused on Saudi Arabia.
Overall, the value of development projects across the Gulf Cooperation Council countries has slowed, even if the value of work remains high. The GCC countries include Saudi Arabia, the United Arab Emirates, Qatar, Oman, Bahrain and Kuwait. So far in 2025, the value of GCC contracts across all sectors is approximately $126 billion, with an estimated $220 billion projected for the full year. This figure is down compared to prior years, with approximately $261 billion in contracts in 2023 and approximately $298 billion in 2024.
“A lot of it is to do with Saudi Arabia,” James said. “The fall is most apparent in the Saudi Arabian market.”
The value of development contracts in Saudi Arabia signed in 2023 was worth approximately $125 billion. In 2024, that figure rose to approximately $156 billion, but in the first eight months of 2025 the value has dropped to approximately $51.5 billion. Full-year 2025 projections push that figure to $77 billion.
In the United Arab Emirates, the drop in investment has been less severe. In 2023, signed development contracts signed reached approximately $95 billion and in 2024 were about the same at $96 billion. But so far this year, the United Arab Emirates has raised $54.3 billion in development investment with a full-year estimate of approximately $81 billion, putting the country ahead of Saudi Arabia for now.
“If you look at both Saudi and the UAE, the numbers are down on those of 2023 and 2024; however, if you compare them to 2014 to 2022 ... [2025 is] actually higher,” James said, adding that it might be unfair to compare 2025's development pace to two record years in 2023 and 2024.
Specifically for Saudi Arabia’s much-touted hospitality and hotel giga-projects, there has been a “downturn in spending,” James said.
According to MEED data, spending on these Saudi projects fell from $34.6 billion in 2023 to $24.2 billion in 2024. Through the first eight months of 2025, investment reached $6.5 billion, and for the full year is projected to be less than $11 billion.
“Around [the second quarter 2024] there was some pause in spending on the giga-projects. … This year that has just accelerated and has become more obvious,” he said.
That $6.5 billion has been awarded primarily to two giga-projects — Diriyah and the mostly residential Roshn.
“Spending on Neom, Red Sea [Global] and other projects has been quite muted,” James said, adding reasons for this include Red Sea having finished its phase 1 of development and preparing for phase 2. He added that “of course at Neom that most of the problems are most obvious.”
Moving beyond oil
The economics of Saudi Arabia’s Vision2030 are aligned with the price of oil, and the current low price of oil has hindered spending of its massive development projects. However, James said the price of oil has held up better than expected.
Other reasons for the investment slowdown include notable cost inflation, lower-than-expected direct foreign investment in the giga-projects and issues around delivery capacity. There are simply too many projects, James said.
There is “very substantial cost inflation and engineering challenges for some of these iconic, very complex giga-projects. The Line, of course, at Neom is one such example with huge costs, and [there are] doubts now and an evaluation of its cost-benefits ratio,” James said.
With a central pillar of Saudi Arabia's giga-projects geared toward boosting tourism, hotel development continues rapidly across the country. According to CoStar hospitality data through July, Saudi Arabia's hotels posted a 12-month occupancy level of 60.8%, down 2.3% year over year. Twelve-month average daily rate across Saudi Arabia's hotels was $189.47 — up 0.4% — and revenue per available room reached $115.14, down 1.9%. During that 12-month period, 19 hotels with a total of 3,626 rooms have opened across the country, with 44,823 rooms in 173 hotels under construction as of July 2025. Saudi Arabia's existing hotel supply as of July was 171,614 rooms in 1,193 hotels.
By segment, the most new hotel rooms opened in Saudi Arabia's upscale and upper-midscale classes (4,363) in 2024, followed by the luxury and upper-upscale classes (1,917 rooms) and the midscale and economy segments (1,048). In 2025 year-to-date figures, luxury and upper upscale lead the way with 1,289 rooms opened, followed by upscale and upper midscale (544 rooms) and midscale and economy (60).
James said there is spending happening in events-focused infrastructure as Saudi Arabia prepares to host the Asian Football Championships 2029, World Expo Riyadh 2029, FIFA World Cup 2034 and Asian Games 2034. He added some level of development will be focused around specific events, and there will also be increased investment set aside for transportation infrastructure.
Saudi officials have announced a second phase of Riyadh’s Line 2, along with the construction of the 600-mile-long Saudi Landbridge railway between Jeddah and Riyadh. The country's Q-Express line is also in development, which will link King Khalid International Airport and Qiddiya Entertainment City and include the North Pole tower that will rise 1.25 miles into the air. Jeddah and Makkah are both due to receive metro systems, and King Khalid International Airport has a new runway planned to open by 2030.
Kick-off of major events
Two giga-projects appearing to be on course for full opening are Diriyah in Riyadh and Roshn, with developments in Riyadh, Jeddah and the Eastern Provinces. James said major contracts were awarded last year and in 2025 for work at Diriyah.
“Effectively, Diriyah, or a large chunk of it, is expected to be ready by the time of the World Expo” in Riyadh in 2029, he said.
James added that the Roshn giga-project development is “continuing as normal.”
The FIFA World Cup is big business wherever it goes. Of the 15 stadiums likely to host matches during the 2034 tournament in Saudi Arabia, 11 will be new and currently are in construction or in the planning phase, the latter of which includes eight stadiums, James said. Hotels are planned for these stadium developments.
One new stadium will be the 92,760-seat King Salman International Stadium in Riyadh, which will host the opening game and the final of the 2034 FIFA World Cup. It and the other 11 stadiums will have an overall capacity of more than 775,000, and 12 of the 15 stadiums will have a capacity of between 45,428 and 47,060.
James said if there is concern about one of the stadiums, it would be around the one at Neom.
“There are fair doubts about the [46,010-capacity] Neom Stadium given the uncertainty around The Line. … The Neom Stadium [is] due to sit on top of one of the modules on The Line,” he added.
Each module had a price tag of approximately $50 billion, so such a colossal spend would always involve questions and evaluation. James said projects at NEOM are not necessarily being cancelled, but their timelines are being extended.
“There will be a longer-term spread of the work that was due to be awarded. … The ambition is still there, the vision,” he said, adding these projects might extend timelines by another 10 years, even by another 50 or 60.
Extended project lengths would include new projects.
“Neom really is a victim of its sheer size,” James added.