Saudi Arabia and Egypt have set up a $10 billion joint fund to develop a megacity,

RIYADH: Saudi Arabia and Egypt have set up a $10 billion joint fund to develop a megacity, a Saudi government source said Monday, as Crown Prince Mohammed bin Salman visits Cairo.

The deal is aimed at developing the Egyptian side of NEOM, the futuristic project straddling Saudi Arabia and Jordan which was unveiled by Prince Mohammed last October as part of plans to diversify the kingdom's oil-dependent economy.

"Saudi Arabia signed (an) investment agreement with Egypt to develop Egyptian lands in the south of Sinai to be part of the NEOM Project," the government source told AFP.

"Saudi Arabia and Egypt have set up a joint fund of equal shares valued at more than $10 billion. The Egyptians' share comprises a leased land for (the) long term."

Prince Mohammed's visit to Cairo is the first leg of his maiden foreign tour as heir to the Saudi throne.

The NEOM deal underscores growing strategic ties between the Arab world's richest and the most populous states -- Saudi Arabia and Egypt -- who are both opposed to Iran's influence in the region.

Egypt is nominally part of a Saudi-led military coalition which intervened in Yemen in March 2015 to fight Iran-backed Huthi rebels.

The two allies are also part of a bloc of nations that has boycotted Qatar since June over alleged ties to Islamic extremists and Iran. 

Prince Mohammed's visit comes ahead of Egypt's presidential polls, scheduled for late March, with incumbent Abdel Fattah al-Sisi expected to win a second four-year term.

The powerful crown prince is expected in Britain on Wednesday for talks with Prime Minister Theresa May and in the United States from March 19 to 22.

He is also expected to visit France in the coming weeks.

The $500-billion NEOM, meaning "new future" in a combination of English and Arabic abbreviations, is planned to be a biotech and digital hub spread over 26,500 square kilometers (10,000 sq miles) in an area facing Jordan and Egypt.