Saudi Arabia’s Neom project is expected to issue bonds for the first time as its developers seek new sources of financing, Bloomberg reported.
The desert megacity, estimated to be worth $500 billion, could raise up to $1.3 billion by selling Islamic bonds, or sukuk, the media outlet reported Wednesday, citing unnamed sources.
The issuance of the sukuk could take place later this year, according to Bloomberg.
Neom is the centerpiece of Saudi Crown Prince Mohammed bin Salman’s Vision 2030 project, a diversification initiative aimed at shifting the Saudi economy away from oil and toward other sectors, including technology.
The country’s sovereign wealth fund, the PIF, has provided the bulk of the funding for the massive project, although it is reportedly yet to approve Neom’s budget for 2024 due to concerns over rising costs.
The realities of the scale and cost of Vision 2030 have begun to raise concern at the highest levels of the Saudi government, Bloomberg reported earlier this month.
In February, the Wall Street Journal reported that Saudi Arabia had begun borrowing to help finance Neom and other Vision 2030 “gigaprojects.”
Tim Callen, a visiting fellow at the Arab Gulf States Institute think tank in Washington, estimates that the PIF would need to raise an additional $270 billion to fully realize its ambitions.
The best-known section of Neom is The Line, a city contained in two 1,640-foot-tall mirrored skyscrapers, running parallel about 656 feet apart. According to Neom’s website, there will be no roads, cars or emissions and will run entirely on renewable energy.
Neom developers also plan to build a “next generation” sustainable port on the Red Sea coast, a ski and adventure resort and a luxury island called Sindalha.
Neom did not immediately respond to a request for comment from Business Insider and declined to comment to Bloomberg.
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