Emaar Properties announced a deal late on Saturday with Kingdom Holding Co to develop what will be the world's tallest tower in Saudi Arabia.
Under the terms of the "strategic alliance" Emaar will oversee the development of the Kingdom City and Kingdom Tower projects in Jeddah, which have a total investment of 100 billion Saudi riyals ($26.7 billion), according to an emailed statement from Kingdom.
The tower will be a kilometer in height, surpassing the Burj Dubai in the United Arab Emirates that's also being developed by Emaar and currently holds the title of the world's tallest skyscraper.
Burj Dubai is due to open later this year at a height of about 890 meters, news reports say. Saud's tower would soar to 1,000 meters.
"Emaar was selected ... for their previous proven experience in the development of mega projects, their knowledge of the area and social setup," Kingdom Holding said in why it choose Emaar for the Saudi project.
Kingdom City in Jeddah is 20 km from the old city of Jeddah near King Abdulaziz International Airport.
The area comprises 23 million square meters including buildings for commercial, residential, institutional, educational, entertainment, retail and hotel facilities.
Kingdom City is expected to house 80,000 residents and accommodate 250,000 visitors to facilities including lakes, canals, water sports and other leisure activities.
The looming Kingdom Tower's will be the project centerpiece and rise from a large retail and conference centre podium.
It will overlook a five-star hotel, office space and luxury residences with sweeping views of the Red Sea.
Plans were first conceived in 2003. In 2007, the U.S. engineering firm Bechtel was named as project coordinator. But Bechtel reportedly pulled out early this year, according to industry reports.
Developing the landmark project in the Middle East's largest economy could help Emaar diversify its exposure to falling real estate values in its domestic market of Dubai.
The Middle East's largest home builder said in April that first quarter profits were down 74 percent due to lower unit deliveries and a fall in sales amid an ongoing property slump in the emirate.
Kingdom, controlled by Saudi billionaire investor Prince Alwaleed bin Talal, has also been hit hard by the global financial crisis.
Last month the company announced an 83.4percent decline in net profit compared with a year earlier.
"The alliance between Kingdom Holding Company and Emaar is strategic," Prince Alwaleed said in the statement.