The Baghdad Avenue project will be built near the capital's international airport, Abdulaziz Al Shammari told Iraqi News Agency.
It will be the biggest shopping district in Iraq, with restaurants, shops and commercial offices, as well as 4,000 apartments and 2,500 villas, he said.
Mr Al Shammari did not offer further details but said relations between Riyadh and Baghdad were going through "great developments".
Meanwhile, a team from the King Salman Medical Centre visited Baghdad for meetings with Iraqi doctors.
“Today, we have begun reaping the relations’ true fruits through the visit of the King Salman Medical Centre team to Baghdad,” Mr Al Shammari said.
"This was the first specialised and practical visit between the best skilled doctors in the kingdom, as well as the best Iraqi doctors, to exchange experiences in areas and sub-specialties."
Mr Al Shammari said economic and cultural meetings between the nations were also planned.
“We will witness significant momentum in activities between the two countries," he said.
This will be a "distinguished stage for investment, which comes from the efforts of the Iraqi Prime Minister Mohammed [Shia] Al Sudani and his team", he said.
Iraq and Saudi Arabia have enhanced relations dramatically in recent years.
The kingdom severed ties with Iraq after Saddam Hussein's forces invaded Kuwait in 1990, but Riyadh and Baghdad began to repair relations in 2016.
Saudi Arabia reopened its embassy in Iraq and the two nations set up a co-ordination council to upgrade ties.
They have since signed a series of agreements relating to politics, security and commerce, leading to the opening of a major border crossing.