Excavation work is under way and construction of the main buildings is expected to commence later this year.
The $2.7bn project is being developed by the Jabal Omar Development Company and is being constructed by a joint venture of Saudi Binladin Group and Saudi Oger.
The masterplan for Jabal Omar covers 1 million square metres and include the construction of six five-star hotels, seven 35-storey residential towers and a four-level retail concourse.
Once completed the development will accommodate up to 40,000 residents.
It is just one of a number of major developments that are transforming the city. Other major projects include the Abraj al-Bait, a 577 metre-high building being developed by Saudi Binladin, and the Rawabi Abraj al-Bait project planned by Jiwar Real Estate.