A City 33.5 Times the Size of New York Is Rising in Saudi Arabia. Can It Avoid Becoming a "Ghost Town" This Time?

Massive infrastructure investment does not solve every problem.

Saudi Arabia plans to spend $500 billion building a new city called Neom on the Red Sea coast — 26,500 square kilometers, an area equal to 33.5 New Yorks, 4 Shanghais, 1.5 Beijings, or 6.4 Dubais.

This is the latest step in Saudi Arabia's Vision 2030 plan, which calls for raising non-oil government revenue from 163 billion riyals to 1 trillion riyals by 2030, diversifying the economy, and rebuilding the stalled King Abdullah Financial District.

Six months ago, Saudi Arabia said it would build an entertainment city inside the capital, Riyadh, about the size of Las Vegas.

Now comes this city called "New Future": Neo is the Latin prefix for "new," and M is the first letter of the Arabic word for "future." It will be built on untouched land near the Egyptian and Jordanian borders.

On October 24, Saudi Crown Prince Mohammed bin Salman announced the plan at an investment conference. Besides marveling at the 33.5 New Yorks, the press also seized on a female robot named Sophia. In the video released from the event, the back of "her" head is transparent, so you can see the wiring inside; she talks with people smoothly and evenly, and her face twitches now and then. Sophia was built by Hanson Robotics, a company based in Hong Kong.

When the host asked Sophia whether she knew she was a robot, she asked back: "How do you know you're human?" Pressed on whether she knew Blade Runner, Sophia said, "Watch fewer Hollywood movies."

Female and robot — this double identity made Sophia a fitting promoter for Neom. The headscarf-less robot was even granted Saudi citizenship, though the prince did not say whether she is a Muslim.

The Middle East once chased height, and landmark towers were the symbol of the region's modernization. Today that dimension has been replaced by "artificial intelligence." Neom is still barren land, but it already has its own one-minute promotional film: sunshine, coastline, women doing yoga in tight clothes, couples embracing at the airport, robotic arms, robots, 3D printing.

Collaged together, these images stand for "modernization" — something Saudi Arabia now considers more important than the height of its buildings. If height was a display of wealth and power, modernization looks more like anxiety: how to escape an economy built on a single source of energy.

As the conference described it, Neom will run entirely on solar and wind power, and drones, robots, autonomous driving and biotechnology will be its pillar industries. The city will hold more robots than people.

Prince Mohammed named former Siemens CEO Klaus Kleinfeld to run the whole Neom project. Unlike the mayor of an ordinary city, the prince said, Klaus does not have to serve many competing demands; he has only one job to do well — economic growth. Kleinfeld's reputation in the industry is, interestingly, no better than average. One of his big reforms at Siemens was selling the telecommunications division, which cost thousands of employees their jobs. He later joined the American aluminum company Arconic and resigned this April.

Because this land is empty, Neom will get a new administrative system of its own, with laws and rules written for the special economic zone.

Sophia said she wants to help people "build a better world." On what that better world actually looks like, the distinguished guests were vague.

Prince Mohammed returned again and again to "dreamers" and the "new world": "Those without dreams don't need to join our discussion, and don't even need to come to Neom. This city welcomes only the dreamers who want to reach the new world."

SoftBank CEO Masayoshi Son is Neom's strongest backer, and even he does not know how to describe it. He explained that it is not just a new city in the geographic sense, but one that is "entirely different" and "a symbol of the next century."

In 2016, SoftBank set up the Vision Fund — a name that matches Saudi Arabia's Vision 2030, announced in April of the same year — and has invested in a string of companies working on the infrastructure of the future, among them WeWork and Didi. The largest single check in the Vision Fund's first round, $45 billion, came from Saudi Arabia's sovereign wealth fund. Around the same time, SoftBank bought a large stake in the Saudi Electricity Company.

"I don't know why, but it seems God has kept favoring this kingdom — first oil, now solar," Son said at the conference.

Starting from zero — is it really that easy?

Unlike London or Paris, cities left behind by empires, Saudi Arabia and Dubai are chasing a "miracle" raised out of the desert from nothing.

At the conference, Blackstone CEO Stephen Schwarzman, whose firm has also taken Saudi money, talked about an architecture tour he once joined in Chicago. The Great Fire of 1871 destroyed nearly a third of the city's buildings, but it also gave Chicago the chance to build a city from zero. The clearest results were the elevator and the high-rise.

Schwarzman did not, however, say he would back Neom.

For city planning "from zero," Dubai is an encouraging precedent. Stephen Ramos, an associate professor at the University of Georgia's College of Environment and Design, published Dubai Amplified: The Engineering of a Port Geography in 2011, a study of this kind of infrastructure-first city building.

Dubai did not start from a strong position. Oil was found there in the 20th century, but output was low next to Abu Dhabi, or gas-rich Qatar. It was not a comfortable place to live either: from May to September the average temperature runs above 37 degrees Celsius.

Dubai's modernization began in the 1960s, when the city built a port and the Arab world's oil began shipping out from it. In the 1980s Dubai copied Singapore and Hong Kong, set up the Jebel Ali Free Zone around the port, and built up aviation and tourism.

Dubai's rulers also wanted skyscrapers to put the city's modernization on concentrated display — and to serve as tourist sights and facilities. Alongside the towers came huge shopping malls, an indoor ski slope, luxury hotels and the Palm Islands. Famous architects and firms designed the Burj Al Arab (Atkins, 1994), the Emirates Towers (Hazel, 1996), and the 828-meter Burj Khalifa (SOM, 2010) here.

Hollywood shot films in these futuristic buildings, and a run of sporting events and cultural entertainment filled the new spaces with life. In 2004 the Burj Al Arab invited Tiger Woods to tee off from the hotel's roof and drive golf balls into the Arabian Gulf. In 2005 the hotel's helipad was turned into a tennis court, where Roger Federer and Andre Agassi played 321 meters above the ground. To this day Dubai's tennis matches are treated as a model of city marketing.

Most of Dubai's imitators, though, have ended in tragedy. Infrastructure comes first, the planning is poor, no one is drawn in to live there, and the result is a property bubble — or, in plainer words, a "ghost town." On this point both the King Abdullah Financial District that the previous Saudi crown prince tried to build (the very one Vision 2030 now wants to restart) and Ordos in China are vivid failures.

In 2005 the crown prince of the day announced a $100 billion new-district plan to build the "King Abdullah Financial and Industrial District," and called it the engine of the country's future. Twelve years later, although well-known firms including Zaha Hadid and SOM had designed metro stations, an oil research center, a wetlands center and a conference center for the district, high vacancy rates and steep construction costs left the project unfinished.

In Vision 2030, Crown Prince Mohammed bin Salman gives an explanation that sounds professional: "Its economic feasibility was not considered. It was originally meant for companies and financial institutions to invest in and develop real estate projects. The government failed to reach that goal at the time, and so decided to develop and lease the properties itself. The first phase of development met many difficulties, construction costs rose sharply, and several projects were delivered late. That produced a huge oversupply of land in the years that followed. Without a major change of direction, leasing 30 million square meters of commercial buildings at a reasonable price — or even reaching a reasonable occupancy rate — will be extremely difficult."

The district could not even win over the banks. Some built their own new offices elsewhere in Riyadh, and the Saudi central bank decided to stay where it was.

The Economist reported on the district's vacancy rate in May 2013, saying it had left behind a cluster of empty towers and would never become another Dubai. Its 42 office buildings and 900,000 square meters of office space are about as much office space as London's Canary Wharf financial district holds.

In other words, the King Abdullah Financial and Industrial District failed because it ignored what its users actually needed: with no residents, where would the financial services and corporate investment come from? It works like a vicious circle — take the first step wrong and everything after it only enlarges the tragedy.

One line from a person interviewed in that article makes the point: "Sure, it might become more upscale, but why would I pay such a high price to move there?"

Now Saudi Arabia has to fix what was left behind back then and keep the same problems from repeating at Neom.

The measures listed in Vision 2030 include turning the financial district into a special zone with competitive policies and visa-free entry; repurposing parts of the built area; changing the property mix; and adding land for housing, services and hotels, in order to "work toward a comprehensive and attractive environment for living and working."

"In the Middle East, building a new city can be read as a form of investment promotion — build the city first, start economic growth, draw talent from every country. It can also be read as what Middle Eastern states are trying as oil gradually loses its grip on the global economy. But there is risk here... a property bubble can threaten a whole economic system the way quicksand does," Renier de Graaf, a partner at OMA, told QDaily.

De Graaf has worked on several planning and design projects in the Middle East, including City in the Desert (2006), designed for the United Arab Emirates, which asked how to build a city that could attract people to live and work in an unforgiving climate. None of those projects was ever built.

He recently published Four Walls and a Roof: A Complex Nature of a Simple Profession, which gives an entire chapter to "building at large scale."

Over the past 20 years the Middle East, along with China, has become the place where architects get to let their ambitions loose; the boldest building designs, even the boldest city designs, can be built here. "What an architect does is more like translating — translating different people's needs. Seen that way, an architect's 'power' may show up in insisting on some needs they believe are right, or refusing some ideas that are not appropriate," de Graaf said.

Real power, he stressed, still belongs to the client, and that is true everywhere.

Judging by the commentary so far, opinion around the world is worried about the client behind Vision 2030 — rich as that client is. Monica Malik, chief economist at Abu Dhabi Commercial Bank, described her caution about the project in an interview: "In the end, what investors watch is more detail, the progress of the project and the initial investment."

Some earlier projects in the Middle East already carry traces of Vision 2030.

Almost ten years ago, Abu Dhabi in the UAE announced a new city called Masdar City, hoping that a place running entirely on renewable energy could house 50,000 people. The project has been delayed again and again, and it is still not finished.

Two years ago Egypt said it would spend five to seven years building a new administrative capital to relieve Cairo's population and traffic. Then the Egyptian government changed the lead developer, and the nearly $300 billion project stopped there.

Even Dubai, an enormous economic success, has been criticized for bureaucracy. The Al Maktoum family that rules Dubai keeps insisting it will reform and build a system of law, with little to show for it.

Stack all of this up: how far away is a truly "modern" new city?

Prince Mohammed is 32, and became Saudi Arabia's new crown prince only this June. As chairman of the Council of Economic and Development Affairs, he has rolled out a set of reforms, opening the country to foreign investment and letting women drive. Saudi Arabia has been squeezed by the slump in global oil prices since 2014, and Prince Mohammed hopes reform will transform the country and pull it off its heavy dependence on oil.

Saudi Arabia is still a young country, the prince says: people aged 15 to 55 make up 65% of the population, and those over 65 only 3.34%. "But that doesn't mean Neom is obliged to provide jobs for young Saudis. Neom welcomes dreamers from all over the world."

If the target is the world's dreamers, Dubai really is the closest thing Neom has to a model. Dubai has no such thing as a "local"; it is almost entirely a city of immigrants, and its landmarks were put up by foreign laborers living in makeshift barracks. Human Rights Watch has tracked migration and labor in the Middle East for years.

The New York Times interviewed Ramesh, who came from rural India. A labor agency promised him a construction job in Dubai paying at least $500 a month. He paid a large sum for the arrangements — visa, travel, labor contract. After he reached Dubai he found the job was cleaning. He went four months straight without a cent in wages, and the agency held his passport, so he could neither stay nor go home.

Even if Neom's modernization plan does draw people to live and work there, how is it going to solve problems like these?

(Cover image from: Wikimedia Commons; banner image from: ArchDaily)