The 254-room hotel, which will have 12,000 square meters of space, will be managed by Rotana Hotel Management Corp., the company said in a statement.
The plot was bought through the bank’s closed-end real estate fund, the Shuaa Saudi Hospitality fund.
“This marks the second such transaction made by the fund in Jeddah and underlines our view that the city is an exciting investment destination for Shuaa Capital,” said Omar Al Jaroudi, chief executive officer of Shuaa Capital Saudi Arabia.
“In Rotana Hotel Management, we have a partner who shares our commitment to generating strong investment returns for our clients as well as supporting the economic growth of the Kingdom,” the CEO said.
The Shuaa Saudi Hospitality Fund I is a Shariah-compliant closed-end real estate investment fund launched by Shuaa Capital Saudi Arabia, in August 2008, under the laws and regulations of the Kingdom of Saudi Arabia.
The fund is offered as a private placement and regulated by the Saudi Capital Market Authority (CMA), in accordance with the real estate investment funds regulations.
It was established in partnership with Rotana Hotel Management Company.
The fund focuses on acquiring and developing prime land and real estate in areas with strong long-term growth prospects and supply-constrained market dynamics.
It is managed by Shuaa Capital Saudi Arabia while the hotels in the fund’s portfolio are operated by Rotana Hotel Management Company.
Selim El-Zyr, president and chief executive officer of Rotana, said the hotel market in Jeddah had performed exceptionally well over the past six months, with an increase in the average room rate of over nine percent.
“This growth compliments the long-term prospects of the Jeddah economy which are being driven by extensive infrastructure and large-scale development projects,” he said.
“We see Saudi Arabia as a particularly promising market for Rotana hotels with significant upside potential,” he added.
Real estate consultancy Jones Lang LaSalle said in May that Saudi Arabia would lead a regional boom in high-quality low-cost hotels, in response to demand from money-conscious business travelers and pilgrims.
