Flying taxis and an artificial moon: Saudi Arabia’s $500 billion desert dream

Sascha: [00:00:02] From Equity Mates media. This is the dive. I'm your host, Sascha Kelly. When you think of Saudi Arabia, you probably don't think of skiing. But the Saudi crown prince, Mohammed bin Salman, wants to change that. And to do that, he's allocated $500 billion of the country's oil wealth to make it happen. Neom is the main project in Saudi Arabia's efforts to modernise the country. What exactly is it? It's the ambition for a city of more than a million people. [00:00:31][29.4]

Audio clip: [00:00:32] Breathtaking architecture and innovative engineering folds seamlessly into the natural landscape. Ascend to a vertical village. [00:00:40][7.9]

Sascha: [00:00:41] One of the largest hydrogen plants in the world. A raft of futuristic technology. And as promised, a ski resort all built on a patch of desert in the north east of Saudi Arabia near the Egypt and Jordan borders. There is so much to unpack here that we had to do an episode to better understand what's going on. It's Wednesday, the 20th of July, and today I want to know what exactly do the Saudis want Neom to be? And can $500 billion build you a ski resort in the middle of the desert? To do this, I'm joined by my colleague at Equity Mates, Darcy Codell. [00:01:14][33.5]

Darcy: [00:01:16] Sascha, I think it's safe to say we haven't done an episode like this before. [00:01:19][2.5]

Sascha: [00:01:19] Quite unusual. And I think it's worth saying before we get going, I want to acknowledge that we are talking about a country that represses human rights and a regime that has murdered dissidents and journalists, including The Washington Post journalist Jamal Khashoggi. And some may see talk of desert ski fields and futuristic cities as a distraction for a country that has a woeful human rights record, you know, not allowing women to leave the house without a male escort, for example. But the Saudis are spending $500 billion on this project, and we do think there's an interesting business story there. So we just thought it was important to acknowledge the Saudi human rights record at the outset before we get going. So with all that said, Dawsey, to really understand the ambition or folly of this endeavour, I think I'd like to understand neom today and Neom future. So can you tell me about the land that's been chosen for it to be built on? [00:02:12][52.4]

Darcy: [00:02:12] I can. It's not exactly the most liveable place at the moment, Sascha. There are no fresh water sources. Temperatures regularly hit 100 degrees Fahrenheit, about 40 degrees Celsius, and it's pretty much rock and sand. As a result, it's one of the least inhabited places in Saudi Arabia. And it borders Egypt and Jordan, as you mentioned. But it's not completely uninhabited. The people of the Hawaiian tribe lived there, about 20,000 of them, in fact. The Saudis have actually been relocating them over the past few years, sometimes forcefully. [00:02:43][31.6]

Sascha: [00:02:44] So we're talking about quite a punishing or harsh piece of landscape that's neom today. But what is Saudi Arabia planning for Neom tomorrow? Since the beginning. [00:02:56][11.1]

Audio clip: [00:02:58] We've changed things. [00:02:59][0.7]

Darcy: [00:02:59] So the Saudis have allocated $810 billion to modernise the kingdom under their Vision 2030 project. It's all going towards culture, entertainment and leisure developments over the next decade. And the goal is to have 100 million tourists to the kingdom by 2030. And Neom has received the majority of this money. As we've said several times, $500 billion of it. So name is meant to be a city of over 1 million residents and 33 times the size of New York City. And they want it to be completely renewable and sustainable. There'll be a desalination facility powered completely by renewable energy. All wastewater will be recycled and used for irrigation, and all energy will be supplied by solar and thermal. There will be no cars or traditional roads. There'll be underground layers of businesses and restaurants. And below that layer, another layer of transport and freight built. [00:03:52][53.0]

Audio clip: [00:03:53] In three layers. The first layer visible above the ground is accessible to pedestrians. The bottom layer is the service layer or the foundation, and the bottom most layer is meant for transportation. [00:04:03][10.8]

Darcy: [00:04:04] And overall, it's designed to be an international tourist destination. [00:04:07][2.9]

Sascha: [00:04:08] But, you know, that doesn't really do the plan justice. Give me the most wild out there. Extreme plans for neon, because I know you're sitting on a couple. [00:04:15][7.1]

Darcy: [00:04:16] I mean, bear with me here, Sascha, because it really does seem like something out of Futurama. I'll go in order of least crazy to most crazy. So Nam wants its own ski resort. [00:04:26][10.2]

Sascha: [00:04:27] Didn't you say you girls crazy numbers crazy? How is it possible to build a ski resort in 40 degree heat? Unless it's not really a ski resort, it's going to be one of those dry sand kind of runs or something. [00:04:37][10.6]

Darcy: [00:04:38] Not quite. So some parts of the city line, which I'll come back to in a minute, they go through a mountain range and at the peaks of that range, temperatures can actually go close to zero in winter. [00:04:48][10.3]

Audio clip: [00:04:49] The seasonal climate provides a multitude of high altitude adventures in the Arabian Peninsula, with the region's first outdoor ski experience. [00:04:57][8.0]

Darcy: [00:04:58] But it would still all be fake snow and would take a lot of energy to power. The snow machines would be going all day and night long, so that's one of their crazy ideas. But we'll move on. They've got some very out. They're building design plans, a double helix, a falcon's outstretched wings and a flower in bloom. Now, I'm not sure how practical they sound, but you can actually see some of those designs on Naomi's YouTube channel. [00:05:23][24.7]

Sascha: [00:05:24] Well, they sound interesting, at least. And a challenge for architect. What else is there? [00:05:28][4.4]

Darcy: [00:05:29] They're going to build? Glow in the dark beaches and an artificial moon. [00:05:32][3.4]

Sascha: [00:05:33] Okay. That one, the artificial moon. I mean, what even is the purpose of that? [00:05:38][4.3]

Darcy: [00:05:38] I have no idea. But they're going to have two moons. One, clearly it's going to be brought in and nice to look at. And the beaches as well. They're putting in a material that will literally make them glow in the dark at night. [00:05:49][10.8]

Sascha: [00:05:50] I think that's too creepy. Honestly, I don't think I'd be comfortable submerging myself in water. That's glowing. You mentioned no traditional roads as well. How are people going to get around? [00:06:00][9.9]

Darcy: [00:06:01] They're going to have taxis and elevators that fly through the sky. Sascha. [00:06:04][3.3]

Sascha: [00:06:05] Stop right now. We don't even have that now. In many cities in the world that are actively working on this solution, I. [00:06:12][6.9]

Darcy: [00:06:12] Know it's hard to believe, but these are going to be drone powered. I have to say it sounds pretty fun, but a bunch of drones lifting you around the city where you want to go. And this is all going to be built on what I mentioned before the line. It's literally a 100 mile long line along which all the 1 million residents would live and it'd be connected by bullet speed trains and everything you need would be within 5 minutes walk. [00:06:37][25.1]

Sascha: [00:06:38] Okay, so that tells the story. And I've got to say, it does sound on face value alone. It sounds pretty idyllic. I'm pretty sceptical about whether this will actually come to fruition. So let's let's dig into that. An oil rich kingdom has dedicated, as we've said, $500 billion to build this idyllic vision. How has progress gone so far? [00:07:01][22.8]

Darcy: [00:07:02] Construction is actually underway on Neom. There are about 2000 employees living there at the moment and developing the city, and most of them have paid very well. [00:07:10][8.4]

Speaker 5: [00:07:11] One day to find a new thing is a great opportunity to be the best we ever imagined or dream to be as a human. [00:07:17][6.1]

Darcy: [00:07:18] Tax free salaries of between 700 to $900000. That's tax free for some of the senior staff, more than 20 times the average income of the Saudi people. But outside of those perks, Sascha, there have been a lot of issues reported, a lot of key staff have quit and they've been complaining of a toxic work environment and just lack of results in the city. But most aren't willing to speak publicly about the city's progress, citing non-disclosure agreements or a fear of retribution. At least one former employee who criticised the project was actually jailed in Saudi Arabia, and other former employees have said that Neom CEO Nazmi al-Nasser has threatened to pull a. On staff and has a, quote, volcanic temper. There's even been a gunfight with a Hawaiian local who refused to relocate from his property, and that ended with the man being shot dead and two officers injured. [00:08:09][51.5]

Sascha: [00:08:10] Okay. So quite a few issues there in the development of this project. And it sounds like we're not necessarily getting the full picture of what is actually happening. But beneath all of these crazy headlines, this project may not be as farfetched as it first appears. So let's take a break and hear from our sponsors. And then I want to get a better understanding of the logic behind this seemingly illogical endeavour. Welcome back to the dive. I'm Sascha Kelley, your host. And I'm joined today by my colleague Darcy Codell. And today we're talking about Saudi Arabia's $500 billion plan to turn a stretch of desert into one of the most futuristic cities on earth. It's going to be complete with a ski resort in the desert, glow in the dark beaches and elevators that fly through space. Now, I haven't been watching Futurama. I've just been reading lots of articles about this city. So, Darcy, tell me, why isn't this completely unrealistic? [00:09:14][64.2]

Darcy: [00:09:15] Okay, the ski resort and those flying elevators might be a little bit unrealistic, but building a city out of the desert may not be. It's been done before in the Middle East. You know where, Sascha? [00:09:25][9.8]

Sascha: [00:09:26] Dubai. [00:09:26][0.0]

Darcy: [00:09:27] Yes, very good. 30 years ago, Dubai was actually mostly sand similar to now. Now. And Sascha, $500 billion can get you a long way. The whole country of Ireland, their GDP for this year is expected to be about $500 billion. And Dubai itself cost $82 billion to build. So that 500 billion might be enough. [00:09:48][21.1]

Sascha: [00:09:49] Yeah, but inflation. Darcy, it comes for all of us. 82 billion yesterday might not be the same as 500 billion today. And they didn't have to build flying elevators. [00:10:00][10.7]

Darcy: [00:10:01] This is true. Good points. But given that the reports are employees are being fired and one was even jailed for saying the project is unrealistic. The Saudis are not taking no for an answer, so I think they're going to push on. [00:10:13][11.9]

Sascha: [00:10:14] Okay. So we've seen success in the Middle East, but there have also been cases where these kind of projects have not been successful. [00:10:19][5.3]

Darcy: [00:10:20] We talked about China's 90 million unoccupied homes in an episode last week. They've got entire ghost cities that were built to replicate major cities around the world like Paris. But no one's living in them. [00:10:31][11.1]

Speaker 6: [00:10:31] The residential complex dubbed Chengdu Chang, roughly translated as Sky Capital. Problem is, this project is missing people. [00:10:38][6.4]

Darcy: [00:10:38] In South Africa, not a fun time. New city near Johannesburg was dubbed as the New York of Africa before fading away in India. Lavazza was a planned city, stylistically based on the Italian town Portofino. But again, those ambitions have been scaled down. [00:10:54][15.9]

Audio clip: [00:10:54] Everything is here. An entire city, all the buildings, the roads, schools, hospitals, you name it, except the people. And looking around, there is not a soul to be seen. [00:11:04][9.2]

Darcy: [00:11:04] So it's achievable to build a city. But it's a lot harder to build a thriving economy and a city that people actually want to move to. [00:11:12][7.8]

Sascha: [00:11:13] Okay. So we're going to put that to the side because building a completely new city from scratch all over the world, we've seen mixed results, but we know it's not completely unrealistic. And what's really interesting here is that the Oil Kingdom plan to underpin this whole venture by becoming a global renewable energy hub, which seems like quite the pivot you see desert. [00:11:34][21.5]

Audio clip: [00:11:37] We see opportunity. [00:11:38][0.7]

Darcy: [00:11:38] That's right, Sascha. Saudi Arabia's wealth has been underpinned by the massive oil reserves. With the transition to renewables. I've seen the writing on the wall and this is where their Vision 2030 plan has come in. But something else Saudi Arabia has a lot of is sunlight. And they plan to convert that sunlight into solar energy and use it to create hydrogen. [00:11:59][20.7]

Audio clip: [00:12:00] You see the sun. We see inexhaustible. [00:12:03][2.9]

Sascha: [00:12:04] Energy. So they're basically planning to move from a global oil giant to a global hydrogen giant. [00:12:11][7.0]

Darcy: [00:12:11] Yeah, exactly. Again, part of that 2030 plan to diversify their income outside of oil, they actually want to become the top supplier of hydrogen in the world. And they've announced plans to install about 27 gigawatts of solar capacity by 2023 and almost 58 gigawatts by 2030. Now, those numbers probably mean nothing to you right now. [00:12:33][21.3]

Sascha: [00:12:33] They do not mean anything to me. Sorry. [00:12:35][1.7]

Darcy: [00:12:35] To give you some context. One gigawatt is enough to power about 750,000 homes. So 58 gigawatts, Sascha, 45 million homes. [00:12:45][9.8]

Sascha: [00:12:46] But there is still a massive difference between being a global renewable energy hub and a city with glowing glow in the dark beaches. You know, I'm trying to still mesh these two things together. [00:12:58][12.3]

Darcy: [00:12:59] There's a big difference, Sascha. But to be fair, the Saudis plan to have completed the first section of the city by 2025, although given that drone taxis and flying elevators don't quite exist yet, there's still a fair bit of work to do. [00:13:11][12.8]

Sascha: [00:13:12] Well, let's leave it there for today. Darcy, thanks so much for bringing me the story of Neom. It sounds like a fascinating place and I'll await with interest whether it ever comes to fruition. And thank you for joining us for today's edition of The Dive. Remember to follow us on Instagram I handle is at the dive dot business news. If you can't remember that it's super easy. It's right there in the show notes below. So no excuses. If you have any topic, suggestions or feedback, then our inbox is always open. It's the dive at Equity Mates dot com and if you enjoy the show then take a screenshot shared on your social media, send it to a friend, spread the word. Word of mouth is truly the best way for our podcast to get out into the world. And we so appreciate when we see that you've shared it. Thank you so much for joining me today, Darcy. [00:13:58][45.8]

Darcy: [00:13:58] Thanks, Sascha. [00:13:59][0.2]

Sascha: [00:13:59] Until next time, [00:13:59][0.0]

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