The investment firm headed by Saudi billionaire Prince Alwaleed bin Talal said Tuesday it signed a 4.6 billion riyal ($1.2 billion) deal with the Saudi Binladen Group to build the world’s tallest tower.

Kingdom Holding Co. said the more than 3,280 foot (1,000 meter) high Kingdom Tower, to be built north of the Red Sea city of Jiddah, is part of the first phase of the planned Kingdom City. The sprawling mega project, announced in 2008, is slated to cover a two-square mile area.

Kingdom Tower will include a hotel, serviced apartments, luxury condominiums and offices occupying roughly 5.4 million square feet, KHC said.

The project is but one of several ambitious mega-ventures in the kingdom, Opec’s top exporter, as it seeks to diversify its economic base from the crude oil that has fueled its growth for years.

In June 2009, KHC signed a deal with Dubai-based Emaar Properties to develop and oversee the construction of Kingdom City and Kingdom Tower.

Emaar, which is partly owned by Dubai’s government, is the developer of the Burj Khalifa, currently the tallest building in the world.

Burj Khalifa, which opened in January 2010, has 160 livable floors and rises 2,717 feet (828 meters), making it not only the tallest building but also the tallest freestanding structure in the world.

By comparison, the tallest building in the United States, the Willis Tower in Chicago, stands at 1,451 feet (442 meters), although counting its antenna towers it rises to 1,729 feet (527 meters).

The One World Trade Center tower being built in New York will measure 1,776 feet (541 meters) with its antenna spire. It’s due for completion in 2013.

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