RIYADH—Saudi Arabia's Prince Alwaleed bin Talal announced plans to build the world's tallest building in Jeddah less than two years after the Burj Khalifa opened in Dubai at a height that many thought wouldn't be surpassed for years.

The planned tower will soar to 3,281 feet (1,000 meters) and will include a hotel, luxury condominiums and offices. It would dwarf the Burj Khalifa, which is 2,717 feet (828 meters), and would also be the world's tallest man-made structure.

Prince Alwaleed at a news conference Tuesday said his company, Kingdom Holding Co., had signed a 4.6 billion Saudi riyal ($1.23 billion) deal with Bin Laden Group to build the tower, which is expected to take more than five years to complete. Bin Laden Group is the largest construction firm in Saudi Arabia and is owned by the bin Laden family, which in the 1990s distanced itself from Osama bin Laden.

"Building this tower in Jeddah sends a financial and economic message that should not be ignored," Prince Alwaleed said. "It has a political depth to it to tell the world that we Saudis invest in our country."

Prince Alwaleed, one of the Middle East's wealthiest businessmen, said finances for the tower are in place and construction is expected to start soon, without giving further details. Its designer was a team led by Chicago-based Adrian Smith + Gordon Gill Architecture.