Saudi-UAE Feud and the Great Recalibration: Neom Scales Back as Vision 2030 Confronts Reality, with the UAE paying the price
Neom is cut down as Saudi abandons spectacle for survival, copying the UAE playbook on property and visas while fighting Dubai for market share as Vision 2030 collides with debt and competition.
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The Kingdom is officially trading megaproject ambitions for more pragmatic bets on data centres, minerals, property markets, and premium residency, but can this pivot save Vision 2030? Does this pivot explain Saudi’s rising feud with the UAE as it tries to take its market share in these sectors?
Saudi Arabia’s economic transformation is entering a new phase. Not the triumphant one initially advertised, but a more sober reckoning with financial constraints, competitive pressures from the UAE, and the need to actually generate returns rather than headlines.
The clearest signal came when Crown Prince Mohammed bin Salman’s flagship Neom project – that $500 billion bet on futuristic desert urbanism – was officially downsized. The Line, once promised as a 170km linear city, will be “radically scaled back” and “totally redesigned” according to people briefed on the matter. The Trojena ski resort has already lost its 2029 Asian Winter Games hosting rights and what remains will be far smaller.
This isn’t just about one megaproject. It’s about the entire economic model underpinning Vision 2030 confronting its limitations.
The timing reveals everything about Saudi Arabia’s fiscal position. After a decade of massive spending and rising private and public debt, with oil prices subdued and the Public Investment Fund under pressure to deliver actual returns, Riyadh is recalibrating.
The PIF, which owns Neom and chairs the entire megaproject portfolio under MBS, is conducting a comprehensive review of all its developments. Hence, the sovereign wealth fund that was supposed to spearhead economic diversification is now being forced to act like an actual investor rather than a blank check for the Crown Prince’s ambitions.
The Pivot to Pragmatism
Saudi Arabia is not abandoning grand ambitions. It is repositioning them around sectors that can deliver near-term returns. The clearest signal is the emerging Neom redesign, where the original concept is being scaled back and repurposed toward more immediately bankable infrastructure. The new emphasis on data centres fits that logic. A coastal site can support seawater cooling, land can be allocated at scale, and the state can wrap the project in the AI narrative without carrying the same capital intensity and execution risk embedded in the earlier Neom plan.
This announcement accompanied three overlapping moves that landed within the same seventy-two-hour window. First, Riyadh is weighing an expansion of the premium residency programme to widen eligibility beyond the current categories, specifically to target individuals with net worth around thirty million dollars, superyacht owners, and high achieving students. Saudi Arabia wants to import the kind of mobile capital and talent that Dubai has absorbed for years, and it wants to do it through a controlled residency mechanism that adds stability for expatriates while keeping the state in the role of gatekeeper.
Second, the kingdom is moving to open property markets to foreigners, including in Mecca and Madinah, which have historically been tightly restricted. The immediate market reaction shows how hungry local capital is for any signal that expands liquidity and demand. Real estate stocks jumped, with the sector index rising sharply and headline names posting significant gains. This is a deliberate attempt to turn real assets into a magnet for foreign capital, and to build an investable property narrative that can sit alongside the broader diversification story.
Third, the equity market is set to open to all non-Saudis from 1 February, removing previous limitations on which categories of foreign investors can participate. This broadens the buyer base, supports valuations, and helps recycle domestic capital by creating more pathways for foreign institutional inflows. All these simultaneous announcements strongly signal a pivotal moment for the Saudi economy and Vision 2030.
While Neom scales back and megaprojects get reviewed, one Saudi company is surging. On Sunday, Ma’aden’s market capitalisation crossed SAR 300 billion for the first time in the Kingdom’s history, driven by share prices reaching SAR 78.40. The state-backed minerals champion is now worth more than SABIC and ACWA Power combined, a remarkable shift considering Ma’aden’s market cap stood at just SAR 35 billion five years ago.
That 8.5x increase isn’t random market enthusiasm. It’s a deliberate state-orchestrated pivot reflecting where Saudi Arabia now sees its economic future. As petrochemicals face declining significance with subdued oil prices and infrastructure projects hit financing constraints, minerals are being positioned as the next frontier. The market (which in Saudi terms means the state apparatus guiding capital allocation) is making a clear bet.
Minerals represent a retreat to extractive capitalism, not the high-value industrial diversification that Vision 2030 promised. The Kingdom was supposed to move up the value chain into advanced manufacturing, technology, and services. Instead, as public debt rises and revenues stagnate, Saudi is doubling down on pulling stuff out of the ground and selling it.
The Competitive Dynamic
