Shuua Capital Saudi Arabia said its hospitality fund has bought land in Jeddah for a hotel development worth more than $130 million, in a deal that marked the first ever land acquisition by a hospitality fund in the kingdom.

The acquired property is situated in a prime location on the Jeddah Corniche, offering spectacular views of the Red Sea and easy access to the city centre, a statement said.

The land will be developed into a luxury hotel tower with affiliated serviced hotel apartments of a total built-up area of around 40,000 sq m, to be managed by Rotana Hotel Management Corporation, the leading hotel management company in the Mena Region.

The 35-storey, 140m tower will house 250 hotel rooms in addition to 150 serviced apartments. The project total cost is estimated at SR 500 million.

“We believe the hospitality sector in Saudi Arabia offers one of the most attractive mid to long term investment opportunities in the world, given the strong fundamentals of the Saudi economy, the consistent growth rates in travel and tourism, and the fast growing need for new hotel developments,” said Sameer Al Ansari, chief executive officer of Shuaa Capital

 “Saudi Arabia is experiencing a sustained boom in business and leisure travel and the Shuaa Saudi Hospitality Fund is in an excellent position to benefit from that,” said Omar Al Jaroudi, chief executive officer of Shuaa Capital Saudi Arabia.

Selim El Zyr, president and chief executive officer of Rotana, said: "There is a shortage of modern hotels in the Kingdom. Demand for available hotel rooms significantly outstrips supply to the background of a booming travel and tourism industry.”

“Our objective is to develop and manage hotel properties to the best international standards which will cater to the needs of the local and regional market, the international traveler and niche markets,” he added.

Diab Chidiac, director of real estate at Shuaa Capital Saudi Arabia, added: “The prime location of the land, the growing demand of hospitality facilities and the support of the partners behind the project, are all factors that warrant the success of this project.”

Average hotel occupancy rates in Jeddah stood at 77 per cent in 2009, and the number of travelers to Jeddah International Airport increased by 9.2 per cent per annum between 2004 and 2008, from 14.1 million to 17.6 million visitors in 2008.

The Jeddah airport, which serves as the entry point for pilgrims visiting Makkah and Madinah, will be renovated with the aim of handling 30 million passengers by the year 2012. – TradeArabia News Service