WORLD PROPERTY CHANNEL ®

Omar Al Jaroudi

(DUBAI, UAE) -- Sitting on a $500 million development chest, Shuaa Capital's (SHUA.DU) Saudi Arabian unit is beginning its acquisition march, even as most of the world continues to struggle with a deflated economy.

Shuaa Capital Saudi Arabia says its hospitality fund has bought land in Jeddah for a hotel development worth more than $130 million, the first ever land acquisition by a hospitality fund in the kingdom, according to Reuters.

The fund is tapping growing demand for hotels in the world's largest oil exporter and will build a luxury project in the Red Sea city worth 500 million riyals ($133.3 million), Shuaa Capital Saudi Arabia said.

"The Kingdom of 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," the firm's chief executive, Omar al-Jaroudi, said.

An increasing number of Gulf firms have recently announced funds to tap opportunities in the kingdom's property sector.

Saudi Arabia has earmarked around $400 billion to boost infrastructure over the next five years and is looking to cater to growing demand for new housing from the kingdom's young population, according to Reuters.

Al Rajhi Capital, the investment arm of Saudi Arabia's Al Rajhi Bank and Bahrain's Arcapita Bank [ARCAB.UL] in February launched a $500 million Gulf property income fund.

Dubai-based Rasmala Investments said in October 2009 it was setting up a 500 million-riyal Islamic property fund to study opportunities in mid-income housing.

However, in Dubai, which has been worst affected in the region by the economic downturn, the emirate's second-largest developer by market value, Deyaar (DEYR.DU), in February of this year postponed a 500 million dirham ($136.2 million) distressed property fund after international investors withdrew previously committed funds.

Property prices in Dubai have plunged some 60 percent since their peaks in 2008 and billions of dollars worth of projects have been put on hold or cancelled.

NOTE: ($1 US=3.750 Saudi Arabian Riyal)
NOTE: ($1 US=3.672 UAE Dirham)

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