Utopia Under Pressure: Rationale and Realities of Mega-Giga-Tera- Projects

Spotlight 

• To bypass retrofitting costs and climate vulnerability, governments are increasingly building large-scale projects and master-planned cities.
• Despite grand plans, multi-decadal projects face cost overruns, risk exacerbating social inequities, and struggle to alleviate population and environmental pressures in former environments.
• Ensuring sustainable development requires coordinated governance, accountability mechanisms, and evidence-based urban governance.

The growing wave of mega-giga-tera projects, alongside the development of entirely new cities, has drawn the attention of both advocates who view these initiatives as powerful engines of economic growth and urban transformation, as well as sceptics, who question the financial viability, technical feasibility, and governance systems associated with such projects.

Over the past 20 years, emerging and developing economies have embraced large- scale projects and new city development as a strategic response to mitigate urbanisation challenges, attract investment, and create environmentally conscious and digitally-driven epicentres.

The Rationale

Today, more than 55 percent of the world’s population lives in cities, a figure projected to exceed 68 percent by 2050. As urban populations continue to grow, rising density has exacerbated traffic, housing shortages, and environmental degradation, increasing pressure on existing infrastructure and public services while also invoking serious public health and safety concerns. The overconcentration of economic activities in existing urban centres has led to higher living and operational costs, reinforcing unequal patterns of wealth creation and development.

Climate change has further intensified these pressures. Cities are experiencing rising temperatures, frequent flooding, rising sea levels, prolonged droughts, and extreme precipitation, threatening physical infrastructure, economic productivity and even human lives in some instances.

As a result, governments are increasingly investing in new cities and large-scale urban development projects to alleviate pressure on existing infrastructure while promising holistic urban ecosystems that enhance quality of life, expand access to affordable housing, and spur economic and job creation. These projects have the potential to generate positive spillover effects for the broader community and become veritable socio-economic powerhouses if guided by inclusive principles and sound governance.

Governments are increasingly investing in new cities and large-scale urban development projects to alleviate pressure on existing infrastructure while promising holistic urban ecosystems that enhance quality of life, expand access to affordable housing, and spur economic and job creation.

New cities offer a clean slate to address the aforementioned urban challenges. In Indonesia’s case, Jakarta’s geography rendered the city susceptible to land subsidence and frequent flooding, prompting a shift to Nusantara. Malaysia similarly constructed Putrajaya to relieve urban congestion in Kuala Lumpur. Egypt’s New Administrative Capital (NAC) aims to alleviate similar congestion and overpopulation issues in Cairo.

Political and cultural drivers are equally important, especially for administrative capital relocations. Politically, a new capital can rebalance power dynamics to unify a country or ringfence it from geopolitical risks. Culturally, relocating an administrative centre offers an opportunity to rebrand national identity or better reflect a country’s cultural diversity. Nigeria’s capital shift from Lagos to centrally-located Abuja was intended to mitigate ethnic tensions and safeguard against potential security threats along Lagos’ coast. Similarly, Indonesia’s capital shift from Jakarta in West Java to Nusantara in East Kalimantan demonstrates an effort to physically re-concentrate political power to the country’s geographic centre. Besides, Jakarta’s island topography makes retrofitting historical and heavily populated coastal megacities nearly impossible. Such projects also lend themselves as powerful symbols of prestige, visibility, and national ambition, as exemplified by Saudi Arabia’s NEOM.

Economic considerations further reinforce the case for large-scale project or new city development. Many political leaders argue that modernising ageing infrastructure is costlier, while new cities offer gateways to investment and a launchpad for economic growth. If carefully designed, keeping the socio-economic lens in mind, these cities could emerge either as a trade, finance, or innovation hub, such as Cyberjaya (Malaysia’s technology hub) or Songdo (South Korea’s international economic hub)  or as a multi-purpose mega-centre of sustainable innovation, biotech, and tourism like Saudi Arabia’s NEOM. Across Africa, projects such as South Africa’s Southern Farms Mega City, Egypt’s New Administrative Capital (NAC), Tatu City in Kenya, and Eko Atlantic City in Nigeria reflect the growing effort to build future-ready urban centres capable of supporting long-term economic growth and improving quality of life. Such efforts also allow governments to embed smart technologies and increase resource efficiency and sustainability considerations in project developments, as demonstrated by projects such as Masdar City and NEOM in the United Arab Emirates and Saudi Arabia, respectively.

While the motivations behind these projects may vary, cutting across cultural, social, economic, political, and environmental factors, their success ultimately depends on effective governance, sustainable financing, and realistic implementation.

The Realities

The gap between the original vision and the realised outcome is often significant. Social inequalities, environmental pressures, and economic uncertainty tend to persist in existing models and risk being replicated in new centres.

Firstly, cost overruns are rampant, and financial challenges can become a fiscal strain at best and a political disaster at worst. Building new cities is a costly and long-term endeavour which does not lend itself well to the swinging pendulum of democratic election cycles or a volatile global economy. Launched during Jokowi’s administration, Nusantara does not exactly fit within the current Prabowo administration’s ambitions, as seen through recent public funding shortfalls which undermine the project’s financial sustainability and long-term political legitimacy. In another instance, the budget for the Line at Neom increased from US$1.6 trillion to US$4.5 trillion, and the project has faced multiple engineering challenges and supply chain deficiencies since its inception, forcing the emergence of a smaller-scoped version of the futuristic city. Given these large-scale mega projects are multi-decadal in nature, measuring progress and ensuring accountability becomes increasingly difficult, heightening the risks of fiscal mismanagement and corruption.

Given these large-scale mega projects are multi-decadal in nature, measuring progress and ensuring accountability becomes increasingly difficult, heightening the risks of fiscal mismanagement and corruption.

Secondly, despite promises of inclusivity and affordability, these projects risk becoming exclusive enclaves catering to the ultra-rich given the high development costs. The rapid relocation of Brazil’s capital from Rio de Janeiro to Brasília led to social stratification, with wealthy groups concentrating in the city centre and poorer communities forced to reside on the outskirts, mirroring the urban settlement trends in Rio that the move had sought to overcome. In Nusantara as well, lack of consultation with local communities heightened concerns of community displacement as well as deforestation and biodiversity loss.

Thirdly, the environmental cost and the impact on biodiversity can also be significant. Large swathes of land are required to build out new mega projects, which may lead to not only displacement of people but also loss of forest cover and biodiversity. For instance, the Line in NEOM’s Saudi Arabia is believed to block the migration routes through the mountains for several species of mammal and migratory birds, including endangered species, prompting conservation groups to identify it as an “emerging issue of concern for global biodiversity conservation”. Furthermore, the construction of entirely new cities also carries a substantial carbon footprint, given the intensive demand for cement, steel, aluminum, and other emissions-intensive materials.

The construction of entirely new cities also carries a substantial carbon footprint, given the intensive demand for cement, steel, aluminum, and other emissions-intensive materials.

Finally, redirecting government funding and planning towards new urban centres will not necessarily reduce the environmental and population pressures in the existing cities. For instance, although Nusantara is intended to ease Jakarta’s ecological pressures, the shift will only relocate an estimated 1.9 million people by 2056, which is a slim fraction of Jakarta’s projected growth from 42 million to 52 million in 2050.  Ultimately, the tradeoffs must be considered more prudently as the fiscal resources allocated to build new projects eat away at the capital available for upgrading existing centres.

Pathways for Inclusive and Sustainable Development

Strong governance systems will be key to ensuring the necessary guardrails and enforcing accountability on stakeholders involved. Governments must ensure rigorous front-end planning followed by regular tracking and measurement protocols to evaluate progress and make necessary adjustments before it’s too late. Independent third-party review and audit of forecasts and progress reports should be mandatory. Establishing structured community engagement channels would help integrate local feedback into project planning and ensure equitable social outcomes. This also enhances transparency, allowing for better alignment of incentives among project sponsors, contractors, and communities.

At the same time, such large-scale projects require consistent financing and coordination across multiple sectors and levels of government. Establishing a country-led secretariat would facilitate inter-agency policy coordination while helping to structure and blend public and private capital, thus avoiding siloed decision-making and adequately allocating capital. The urban management framework should be all-encompassing and capable of integrating physical infrastructure, environmental management, economic development, social services, land-use planning, and digital information systems within its fold.

Digitisation can further improve the governance dimension by supporting intelligent transport systems, energy and water management, environmental monitoring, public safety, emergency response, and more evidence-based service delivery. The idea is to not only adopt technology but also utilise data to support evidence-based urban governance.

Nevertheless, the long-term success ultimately depends on placing social inclusion, environmental sustainability, and community participation at the heart of urban development rather than treating them as secondary considerations.

Mannat Jaspal, Director & Fellow, Climate and Energy, ORF Middle East 

Leigh Mante is a Junior Fellow, Climate and Energy, ORF Middle East.