Move comes as millions of Muslims began arriving at the holy city for annual pilgrimage
Saudi Arabia is to spend around US$400m on development projects at holy shrines on the outskirts of Makkah, the official Saudi News Agency reported.
The report said the investment projects would include linking the city of Mina with Jamarat in Al-Azizia, the expansion of the western parts of the holy site of Jamarat, the transfer of the camel and cattle slaughter houses to Al-Sharayea in Mina and improvements to the water circulation in Muzdalifah and Arafat.
The work was announced by Dr Sahal Al-Sabban, Undersecretary of the Ministry of Hajj for Transport and Projects in the holy places and came as millions of pilgrims began arriving this week in Makkah for Islam's annual hajj pilgrimage, which starts on Wednesday.
Hajj must be performed by all Muslims at least once in their lifetime who are capable of making the expensive, difficult journey, a duty that applies equally to Sunni and Shi'ite Muslims at a time of tension between Islam's two biggest sects.
Saudi leaders have emphasised it is a strictly religious occasion and they are prepared to deal with any troublemaking.
Authorities are keenly aware of past episodes of violence at hajj, such as in 1979, when attackers seized the Grand Mosque, beginning a two-week siege that left hundreds dead.
Last year nearly 3m pilgrims performed the hajj, with roughly a third from inside the conservative kingdom. The Saudi authorities said there have so far been 1.7m arrivals from abroad and about 200,000 from inside Saudi Arabia.
Makkah's merchants, famed across the Arab world, are already doing a thriving trade as pilgrims stock up on souvenirs such as prayer beads and mats, Qur'an, dates, gold and zamzam water, pumped from a holy well.
Saudi Arabia's king is formally titled Custodian of the Two Holy Mosques and the ruling family has long based its claims to reign on its guardianship of Islam's birthplace.
Over the past decade it has spent billions of dollars expanding the Grand Mosque and building new infrastructure to avert the stampedes and tent fires that marred past pilgrimages with hundreds of deaths. The last deadly stampede was in 2006, when 360 people were crushed to death.