Saudi Arabia: Public Investment Fund (PIF) realigning priorities to focus on non-infrastructure projects
Saudi Arabia is preparing to realign its $925 billion Public
Investment Fund (PIF) toward sectors offering more immediate and
sustainable returns, shifting away from the large-scale real estate
gigaprojects that have dominated the Kingdom’s development agenda for nearly a
decade, according to a source familiar with the matter.
Introduced in 2016 by Crown
Prince Mohammed bin Salman as part of Vision
2030, Saudi Arabia’s transformation strategy centered on
megaprojects such as NEOM, the futuristic city on the Red Sea, and Trojena, a
winter sports destination planned for the northern mountains. However, several
of these projects—some designed for global events—have faced repeated delays
and scaling back.
The source said the new PIF strategy will
narrow its focus to logistics, mining, religious tourism, and emerging sectors
such as artificial intelligence (AI) and data centers, capitalizing on the
Kingdom’s vast energy resources. “The aim is to secure more sustainable
near-term returns while supporting long-term diversification,” the source
noted.
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PIF
Governor Yasir Al-Rumayyan, speaking at the Future
Investment Initiative (FII) conference in Riyadh, confirmed that the
fund’s updated strategy would be unveiled “very soon.” He said it will center
on six ecosystems — travel and tourism, urban development, advanced
manufacturing, industrial and logistics, clean energy, and renewable
infrastructure — with NEOM positioned as a standalone ecosystem.
New priorities take
shape
PIF’s five-year investment plan concludes this
year, and its board has already approved a new “core strategy,” according to
multiple sources. The repositioning comes amid growing pressure on PIF and its
subsidiaries to generate higher short-term returns after years of heavy
spending on infrastructure and tourism megaprojects.
The revised strategy envisions Saudi Arabia as
a global logistics hub, leveraging its geographic position and lessons from
recent disruptions in Red Sea shipping. It will also prioritize the expansion
of the mining sector, particularly in rare earth minerals, as part of the
country’s push to diversify exports and industrial capacity.
At the same time, the Kingdom will boost religious
tourism, with new projects underway in Mecca and Medina. A recently announced
expansion of Mecca’s Grand Mosque will add nearly 900,000 new prayer spaces.
AI and energy synergy
AI featured prominently at this year’s FII
summit, where Humain — a
PIF-owned AI firm — announced plans to develop 6 gigawatts of data center
capacity. “Let’s just say everything we ask for, we get,” CEO Tareq Amin
said when asked about funding.
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Saudi Arabia will also continue to invest in oil
and petrochemicals, while scaling up renewable energy as a supplementary
source, the source added.
PIF’s annual report showed an average return
of 7.2% between 2017 and 2024, down from 8.7% a year earlier due to impairments
on certain projects. Analysts note that many megaprojects have yet to yield
adequate returns, as several remain incomplete or under revision.
The Red Sea Global luxury resort development
is among the most advanced, though its current hotel occupancy averages around 40%,
according to local media. Meanwhile, The Line, NEOM’s 170-kilometer linear
city, has been scaled back to focus initially on a 2.4-kilometer segment that
includes a World Cup stadium.
International and entertainment
investments
PIF has also been reducing its international
exposure, aiming to bring foreign investments down to 18–20% of its portfolio
from roughly 30%. At the same time, it continues to diversify domestically —
most recently through a $55 billion buyout bid for Electronic Arts (EA),
expanding its footprint in the global gaming industry, a personal interest of
the Crown Prince.
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As
PIF recalibrates its investment priorities, analysts say the fund’s evolution
reflects the Kingdom’s shift from image-defining megaprojects toward strategic,
income-generating sectors that strengthen fiscal resilience and sustain Vision
2030’s long-term ambitions.
Source: Reuters
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