It is already the most expensive real estate on the planet and it is about to become a whole lot more costly as investment floods into property around the holiest site for the world's one billion Muslims.
As the bulldozers move into the old city of Makkah some scholars accuse developers and banks of making vast profits while destroying cultural sites.
Every year millions of Muslims descend on the Holy City of Makkah to perform the Hajj and Umrah pilgrimages.
Now global investors are being invited to invest in the redevelopment of what is already the most expensive real estate on the planet.
Makkah is expected to attract some US$100bn in investment over the next decade and international investment is already flooding into the Holy City where scores of new skyscrapers, shopping malls, hotels and timeshare apartments are planned.
"Investors are looking for a safe haven and Makkah is as close as you can get to a recession proof-market. Makkah will always have Hajj season and Umra season," says Imad Awad, head of equity capital markets at NBD Investment Bank, which is advising on a private placement for a new property company established to redevelop part of the site.
"Muslims are becoming more and more affluent, incomes are rising and these people have a spiritual side of their life and they will always want to visit Makkah," he says.
But the race to redevelop the Holy City has drawn criticism from some Islamic scholars fearful that cultural sites are being destroyed while developers ramp up their profits.
The surging price of crude which reached a record high of US$139.89 a barrel on June 16, is pumping billions of dollars into the Saudi Arabian economy and driving demand for real estate among the nation with the highest number of millionaires in the world.
Wealth is also burgeoning among the region's Muslim nations according to the World Wealth report released earlier this week by Merrill Lynch which revealed the number of super-rich in the region jumped by 15.6% in 2007 to around 400,000.
Saudi Arabia, the world's top oil exporter, had the highest number of millionaires at 101,000, up from 90,000 in 2006. The number of Muslim pilgrims travelling to Saudi Arabia is also rising and expected to grow at a rate of up to 10% over the next three years.
Hundreds of homes are being demolished around the Hamra to make way for a vast redevelopment of the site by order of HRH King Abdullah, while around 230,000 sq m of land is being cleared for the construction of high-rise apartments, many of which will be sold as timeshares to visitors.
"The whole area surrounding the holy sites is being developed, all the old buildings are being demolished, and in their place, more modern buildings that can accommodate more pilgrims are being constructed," says Dr Fahas Bin Al-Jarboa, deputy secretary general at the Supreme Commission for Tourism in Saudi Arabia.
"We expect Mecca to change dramatically."
But for some scholars the change is too dramatic.
"We are now witnessing the last seconds of Makkah as it was created by God with its landscape and mountains," says Dr Sami Angawi, architect and founder of the Centre for the Custodian of the two Holy Mosques Institute for Hajj Research, which draws on research from 160 scholars.
"Now they want to take away the mountains and make Makkah into a flat piece of land. The traditional city should have been left alone and we should have expanded outside like every sensible city has done in the world," he says.
Lahem Al Nasser, an independent Islamic banking expert supports the redevelopment of Makkah but says that new residential real estate should be reserved for pilgrims.
"A number of people are concerned about preserving the historical value of the architecture in Makkah and are conservative about building towers that will hide the view of Al Kaaba and its surrounding landmarks," he says.
"It's an understandable viewpoint but the existing need for these developments also has to be taken into consideration."
The 'Rawabi Abraj Al Bait' project is the latest large-scale real estate development to be launched by a newly formed property company spun out of Kuwaiti developer Grand Real Estate and is being built by a unit of Saudi Bin Laden Group.
The first phase will include nine towers, developed on a 'Build, Operate, Transfer' basis at a cost of nearly US$3bn while the entire development will eventually include 21 residential and hotel towers with over 26,000 rooms.
It will provide underground access through tunnels to the Holy 'Haram' area.Property prices around the Haram in Makkah have already reached almost US$67,000 per square metre and are expected to rise four times higher says Awad.
That is almost double the cost of land in Monaco, the most expensive real estate in the world according to data from the Global Property Guide.
"The land around the ‘Haram' costs around 250,000 riyals (US$66,670) per square metre and a lot of developers are expecting the price of this land to go up to one million riyals (US$266,000) per square metre," says Awad.
Saudi Arabia is under pressure to increase the allocations it sets every year for visiting pilgrims from around the world, which has encouraged authorities to add new apartments, shops and hotels around the site.
Last year Muslim pilgrims spent more than 10 billion riyals (US$2.66bn) in Makkah during Hajj, according to the local Chamber of Commerce and Industry. The influx is attracting increased interest from international hospitality chains, competing to open hotels in the Holy City and around other religious sites in the country.
Hotel groups including Fairmont and Rezidor also plan to tap surging demand in Saudi Arabia for religious tourism with Rezidor aiming to open three new hotels in the Holy Cities by 2010.
"Saudi Arabia is one of our major growth markets."
Last year over two million Hajj pilgrims visited the Holy City during its peak period. Religious tourism will be our main focus," says Jean-Marc Busato, area vice president of the Rezidor Hotel group.
The most expensive land in Makkah is located around the 'Holy Haram' area where views of the Al Kaaba command the highest prices.
As many as 15 million people visited Makkah in 2007 according to Dr Saleh Habib, CEO of Jiwar Real Estate Company, the unit of the Saudi Bin Laden Group that is building towers close to the Holy Haram.
"Demand for real estate is extremely high because there's no supply," he says, adding that visitor numbers to Makkah are rising by as much as 10% every year.
While demolition work gathers pace, the developers of the Holy City will need to tread a careful path between providing desperately needed accommodation for the rising number of pilgrims visiting Makkah while ensuring they do not further alienate conservative opinion opposed to the redevelopment of the old city.
"The planning is only thinking how many people can be accommodated and how much money can be made from buildings overlooking the Kaaba, as if it were a tourist attraction," says Dr Angawi.
"Maybe the development is going to make a lot of money but can't they make it and respect the sites at the same time or do we just make the two Holy Cities totally out of balance when they are supposed to be the example of equilibrium in the world?"