Saudi Arabia halts Mukaab ‘The Cube’ skyscraper project amid falling oil revenue, new AI focus

Saudi Arabia has suspended work on the ambitious Mukaab skyscraper, one of the most high-profile elements of its Vision 2030 transformation plan, Reuters reported on Tuesday, as the kingdom reassesses spending priorities in the face of shrinking oil revenue and a strategic pivot toward faster-return sectors such as artificial intelligence (AI) and mining.

The gargantuan cubic tower, designed to stand 400 metres tall and 400 metres wide and billed as capable of holding 20 Empire State Buildings, is at the heart of Riyadh’s New Murabba development.

According to Reuters report, work beyond initial excavation and foundational pilings has now been stopped indefinitely as authorities examine whether the project remains financially viable.

Vision 2030 megaprojects on ice

The Mukaab, envisioned as a mixed-use destination featuring one of the world’s largest AI-powered dome displays, was meant to epitomise Saudi Arabia’s break from an oil-reliant past toward a diversified, technology-led future.

Its suspension represents the first major project in Riyadh’s capital to be publicly reassessed and potentially scaled back.

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The decision comes amid a broader recalibration of Saudi spending. Several other flagship projects under the Vision 2030 umbrella, including parts of the sprawling NEOM megacity, have also been scaled back or re-evaluated in recent months.

Also, Saudi Arabia said it would indefinitely postpone hosting the 2029 Asian Winter Games set to take place at Trojena, another NEOM megaproject that has faced delays.

Projects in focus now include infrastructure for World Expo 2030 and the 2034 World Cup, the sprawling $60 billion Diriyah mixed-use cultural zone and the Qiddiya tourism megaproject, Reuters reported.

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Economic realities against urban fantasies

Saudi Arabia’s push to diversify its economy follows years of fluctuating oil prices and persistent pressure on public finances.

Saudi Arabia’s economy grew 5 per cent in the third quarter from a year earlier. Oil activities expanded 8.2 per cent year-on-year, followed by growth of 4.5 per cent in non-oil activity and 1.8 per cent growth in government activity.

Saudi Arabia forecasted a budget deficit of 165 billion riyals in this year, and deficits up to 2028.

Amid this, the kingdom’s dazzling, and capital-intensive, urban fantasies are being judged against hard economic realities. Projects that once served as beacons of national pride and global ambition now face increased scrutiny for their return on investment.

Public Investment Fund’s strategic reset

At the centre of this shift is the kingdom’s $925 billion sovereign wealth vehicle, the Public Investment Fund (PIF), which has been steering much of Saudi Arabia’s diversification drive. Reuters reported that the PIF is now stepping back from high-cost, long-horizon bets in favour of sectors that promise more immediate revenue streams, such as logistics, AI, and mining.

According to Reuters report, after recording an $8 billion writedown on gigaproject investments in 2024, the fund has begun prioritising investments in technologies and industries capable of generating quicker returns. This reflects a shift from speculative megaprojects toward domains where commercial demand and global growth trends, particularly in digital and resource sectors, align with Saudi Arabia’s broader economic goals.

From skyscrapers to silicon and subsoil

Saudi Arabia is increasingly channeling capital into AI development and digital infrastructure, aiming to build capabilities that can compete on the global stage. Partnerships with leading technology players and the establishment of AI data centre networks underscore the kingdom’s ambitions to become a regional AI hub.

Humain, an AI company backed by PIF, has secured several agreements including deals with Elon Musk’s xAI and Blackstone-backed AirTrunk for data centre projects in the country.

Simultaneously, the mining sector has emerged as a priority growth area. The kingdom’s mining minister said it is working to secure critical minerals such as copper and lithium, essential for electric vehicles and renewable energy, as part of its efforts to reduce dependence on oil, and is planning to spin off its mining investment firm Manara Minerals.

While traditional energy sources remain foundational to the Saudi economy, the acceleration into AI and mining reflects a strategic hedging against the long-term volatility of oil markets and global shifts toward decarbonisation.