Saudi Arabia is set to redirect its massive $925 billion Public Investment Fund (PIF) away from ambitious real estate megaprojects that have been central to its economic transformation efforts over the past decade, according to insider information.
Launched in 2016 by Crown Prince Mohammed bin Salman (commonly referred to as MbS), the Vision 2030 initiative aimed to diversify the kingdom’s economy through large-scale developments, with the PIF serving as the primary funding mechanism.
Key elements of the original plan included NEOM, a high-tech city envisioned in the desert along the Red Sea, and initiatives for winter sports in the northern mountains featuring artificial snow.
However, projects like NEOM—projected to house up to 9 million people—have encountered ongoing setbacks and delays.
The revised strategy, motivated by the need for more reliable short-term returns, will prioritize areas like logistics, mineral extraction, and religious tourism. Additionally, the kingdom is ramping up investments in artificial intelligence (AI) and data centers, leveraging its abundant energy resources from hydrocarbons and beyond.
This pivot comes as the PIF faces increasing demands to improve performance from its investments. Analysts note that many megaprojects have yet to deliver returns commensurate with their costs, with several still incomplete.
The fund’s current five-year strategy concludes this year, and an updated version outlining new priorities is expected to be revealed shortly. Recently, the PIF board approved a new “core strategy.”
Under the new approach, Saudi Arabia aims to position itself as a key global logistics center, especially in light of recent Red Sea shipping disruptions highlighting supply chain vulnerabilities.
The kingdom’s untapped reserves of rare earth minerals will also be emphasized to bolster its mining industry.
Religious tourism in Mecca and Medina is another focus, with recent announcements including expansions at the Grand Mosque in Mecca adding approximately 900,000 indoor and outdoor prayer spaces.
AI has taken center stage at recent events like the Future Investment Initiative (FII) forum, where discussions and displays highlighted futuristic urban concepts. PIF-owned AI firm Humain plans to develop around 6 gigawatts of data center capacity, with its CEO indicating strong financial backing.
The kingdom will maintain heavy investments in oil and petrochemicals, supplemented by renewables. PIF’s average annual return from 2017 to 2024 stood at 7.2%, a drop from 8.7% at the end of 2023 due to project impairments.
In the past year, the fund has indicated a reduction in international investments, targeting 18-20% of its portfolio down from 30%.
Projects like Red Sea Global report around 40% occupancy, while Trojena—slated for the 2029 Asian Winter Games—may be delayed to 2033. NEOM’s “The Line” has been downsized to a 2.4 km section featuring a World Cup stadium.
PIF has also ventured into gaming, supporting a $55 billion acquisition of Electronic Arts.
This strategic realignment reflects efforts to adapt Vision 2030 for more achievable and profitable outcomes in the near term.