The company’s SHUAA Saudi Hospitality Fund signed a memorandum of understanding with landowner Youssef Ismail Youssef on Tuesday, marking its second investment in the Kingdom.

Earlier this year, the fund had acquired a prime plot of sea-facing land on the Jeddah Corniche for the development of a five star hotel, to be managed by hotel giant Rotana.

The newly acquired land is situated in the heart of central Jeddah on Madinah road close to the Ruwais area, which will be undergoing a complete urban regeneration.

It boasts convenient road access to all Jeddah landmarks and is less than 20 minutes away from Jeddah’s King Abdulaziz International Airport. The land will be developed into a 254-room business hotel.

The hotel will have a total built-up area of approximately 13,000 square meters and will also be managed by Rotana. The total cost of the project is estimated at SR160 million.

Jeddah is a strategic business and leisure destination. It has a growing population of over 3.4 million people and is considered the second commercial capital of Saudi Arabia.

Average hotel occupancy rates in Jeddah stood at 77 percent in 2009, while the number of travelers to King Abdulaziz International Airport (KAIA) increased by 5.1 percent per annum between 2003 and 2009, from 13.1 million in 2003 to 17.8 million visitors in 2009.

KAIA, which serves as the entry point for pilgrims visiting the Holy Cities of Makkah and Madinah, will be renovated with the aim of handling 30 million passengers by 2012.

“The SHUAA Saudi Hospitality Fund is at the core of our private equity and real estate platform,” said Omar Al-Jaroudi, chief executive officer of SHUAA Capital Saudi Arabia.

“The fund provides a unique opportunity to diversify into Shariah-compliant hospitality and hotel investments — a sector otherwise not represented in Islamic investment portfolios. 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.”