KINGDOM Holding Co, the investment firm controlled by Saudi billionaire Prince Alwaleed bin Talal, plans to build a 1-kilometer-tall building in the Red Sea city of Jeddah.

Kingdom Tower is part of a 100-billion-riyal (US$26.7-billion) real-estate project in Jeddah known as Kingdom City, the Riyadh-based company said in a statement posted on its Website.

Saudi Arabia, the world's largest oil exporter, was seeking to diversify its economy away from energy revenue and develop its infrastructure with new industrial cities such as the US$120-billion King Abdullah Economic City, Bloomberg News reported.

Dar Al Arkan Real Estate Development Co started work on Saturday on the 50-billion-riyal residential and commercial buildings in Jeddah's Khuzam Palace.

Kingdom City is 20 kilometers from the old city of Jeddah near King Abdul-Aziz International Airport and will have commercial, residential, institutional, educational, entertainment, retail and hotel facilities.

Kingdom City is expected to have 80,000 residents and accommodate 250,000.