Saudi Arabia and Egypt set up a $10 billion joint fund on Sunday to develop a planned mega-city, committing more than 1,000 square kilometres in the south Sinai, as Crown Prince Mohammed bin Salman met President Abdel Fattah El Sisi in Cairo.
The deal came at the start of Prince Mohammed's first public trip abroad since becoming heir apparent last year.
Egypt and Saudi Arabia have strengthened ties since Sisi took power in 2013 after ousting the Muslim Brotherhood, which both countries have banned and designated as a terrorist organisation.
A Saudi official told Reuters that Riyadh's part of the new joint investment fund will be cash to help develop the Egyptian side of Neom, which Prince Mohammed unveiled last October as part of plans to wean the world's top crude exporter off oil revenues.
The investment deal underlines the strategic ties between the richest Arab state and the most populous.