Saudi Arabia is currently home to some of the world’s largest construction giga-projects, which together are reshaping the Kingdom’s investment landscape. These multi-billion-dollar developments include NEOM, Qiddiya, a range of initiatives by Red Sea Global, and the work of the ROSHN Group and Diriyah Company. Projects of this scale require diversified and sustained sources of funding, drawing increasingly on the Kingdom’s capital markets alongside the international debt market. As government and corporate bonds and sukuk (Islamic bonds) become core financing instruments for these giga-projects, Saudi Arabia is positioning itself as one of the world’s leading centres for debt issuance. Market participants are seeking to leverage this momentum to deepen liquidity and support the development of a fixed-income market.
Building The Vision
The most headline-grabbing of the giga-projects is the $500bn NEOM, which was launched in 2017. The new city is being constructed on the northern Red Sea coast across a 26,500-sqkm site, highlighting the scale of capital deployment required. Key infrastructure components were reported to be nearing completion by December 2025, reflecting the pace at which flagship infrastructure is being delivered. Qiddiya is another large-scale urban development, covering 360 sq km and located 45 km from downtown Riyadh. The project is focused on entertainment and sports, positioning it as a driver of domestic tourism and leisure spending, with a projected population of around 500,000 residents. Red Sea Global is investing in regenerative tourism along the Red Sea coast, with plans to develop 22 islands and six inland sites. ROSHN is delivering nine residential developments across the Kingdom, covering approximately 200m sq m, while the Diriyah Company is redeveloping the historic town of Diriyah with more than 28 hotels and 18,000 new residential units, reinforcing the role real estate plays in supporting long-term capital market activity nationwide.
Funding
These projects are being developed primarily by the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund. The PIF held $913bn in gross assets under management in 2024, with around 6% of this, or approximately $56bn, allocated to giga-project investments. Bond and sukuk issuance in the Kingdom has been growing in both size and frequency as fiscal pressures have increased, driven by lower oil prices and revenues. In September 2025, the government forecast a fiscal deficit of 2.3% of GDP for the year. The scale of spending required by the giga-projects adds further pressure to public finances, a challenge that is increasingly being managed through debt issuance.
Fortunately, Saudi Arabia continues to benefit from a relatively low public debt-to-GDP ratio of around 30%. The International Monetary Fund (IMF) has indicated that it is comfortable with this ratio rising further in the period ahead, given the Kingdom’s substantial foreign reserves. Supported by these strong fundamentals, demand for Saudi debt has remained robust. In September 2025, a $5.5bn two-tranche sukuk issuance attracted $17.5bn in orders, underscoring strong investor appetite.
Looking ahead, further bond and sukuk issuance appears likely. In the first nine months of 2025, the Kingdom issued around $20bn in euro- and dollar-denominated debt, just short of its 2017 record of $21.5bn. Goldman Sachs estimates that international borrowing could reach $25bn in 2026. The final figure will depend on oil revenues and the extent of any reductions in government spending, with some moderation in giga-project timelines also signalled during 2025. For the Kingdom’s capital markets, however, increased issuance remains broadly positive, supporting the deepening and liquidity of the domestic fixed-income market and providing investors with a wider array of debt instruments. As such, the year ahead is likely to be an active one for debt issuers.
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