Saudi Arabia’s ‘Neom’ megaproject could be downsized into a data center hub, it has been reported.

The huge property development scheme, the centerpiece of which was a 170km-long linear city known as ‘The Line’, is now being scaled back thanks to a combination of cost overruns, construction delays, and plummeting oil prices.

Unnamed officials speaking to the Financial Times said it would now become a “far smaller” development supporting “industrial” applications, likely undergirded by a water-cooled data center hub on the northeastern coast of Saudi Arabia.

In a separate statement, Neom appeared to confirm the site’s new designation as a data center hub. As Saudi Arabia “works to establish itself as a global hub for data and AI,” it said, “Neom is focused on attracting investors, partners and tenants in these fast-growing sectors.” It added that the development benefited from “several natural advantages” in this respect, including large amounts of renewable energy, land, and existing digital infrastructure.

It remains unclear how Neom’s repurposing as a data center hub builds on its deal with DataVolt, struck in February 2025, to develop an AI factory campus at ‘Oxagon,’ the project’s industrial city. AI venture Humain joined the project in November 2025.

Neom was originally founded in 2020 as the backers of ‘The Line,’ a new city in Saudi Arabia’s northwestern Tabuk Province, contained within a wall of steel and glass running inland from the coast into the desert interior. The development was initially designed to accommodate up to nine million people and was estimated to cost around $500bn. Other satellite projects were also planned, including Oxagon and Trojena, a ski resort designed to host the 2029 Asian Winter Games.

Though construction of The Line commenced in 2022, a review into its long-term feasibility was launched last year by Neom’s chief executive Aiman al-Mudaifer after his predecessor suddenly resigned and cost estimates ballooned to an eye-watering $8.8trn by 2080, according to reporting last year by the Wall Street Journal.

Neom’s redesignation as a data center hub would add to the growing number of such projects approved for construction in Saudi Arabia. According to S&P Global, the megawatt load for data centers in the Kingdom will expand by an estimated 29 percent each year until 2030.

This is guided in large part by the kingdom’s ‘Vision 2030’ initiative, which aims to accelerate its digital transformation amid a general diversification of the national economy away from oil production. Several new developments have already been spearheaded by its Hub for Manufacturing AI in Neom (Humain), including a new 500MW facility to be built in partnership with Elon Musk’s xAI venture and the creation of 1GW of capacity with the Saudi Telecom Company.

Humain intends to deliver 6.6GW of capacity within the next decade. Despite this, analysts have questioned the long-term viability of the data center sector in Saudi Arabia. According to a report published by Rest of World and non-profit Climate Central, almost every data center planned in the country is located in an area considered too hot for normal operations, putting greater pressure on operators to consider novel water-based or dry cooling technologies for these facilities to counteract the effects of climate change.

Learn more about the data center market in Saudi Arabia and meet with other executives and experts in the region at the DCN Riyadh event next year.