Jadwa Investment, a major Saudi investment management and advisory firm, has launched Jadwa Al Azizia Real Estate Investment Fund, the firm’s first real estate fund in Makkah.

The fund will develop two towers for pilgrim accommodation in the Al Aziza area at a total cost of SR440 million ($ 117 million). The project will add an additional 900 hotel rooms to the holy city’s hospitality market, providing accommodation for world Haj pilgrims.

“We see a significant growth opportunity in Makkah’s hospitality sector,” says Tariq Al-Sudairy, MD and CEO of Jadwa Investment. “In line with our real estate investment strategy, the fund expands the firm’s real estate portfolio and provides another vehicle for our clients to realize capital appreciation.”

The Saudi government is undertaking several large-scale infrastructure projects in Makkah to serve the growing number of pilgrims and to enhance the quality of life for the holy city’s citizens.

The Haram expansion, the largest of its kind, will increase the capacity of the mosque to allow for 5.5 million Haj pilgrims per year by 2020, compared to 3.1 million in 2010. Other projects include the expansion of Jeddah airport, the Haramain railway, the Masha’er railway and, most recently, the Makkah metro project.

The cumulative effect of these mega-projects will be a significant increase in demand for hospitality services in Makkah, which is projected to outstrip supply by 20 percent in the coming three years.

“We are expanding our local real estate offering, helping our clients to benefit from continued economic and demographic growth, sustained government investments in infrastructure and strong demand for real estate in the Kingdom,” says Zaheeruddin Khalid, MD of asset management and chief investment officer at Jadwa Investment. “As a leading manager of Shariah-compliant investment vehicles, Jadwa is well positioned to offer such investment opportunities to our investors.”