Shuaa Capital Saudi Arabia has concluded a land acquisition on behalf of the Shuaa Saudi Hospitality Fund I.
The acquired property is situated in Jeddah Corniche with views of the Red Sea. The land will be developed into a luxury hotel tower, to be managed by Rotana Hotel Management Corporation and the project total cost is estimated at $133 million. The SHUAA Hospitality fund has a target size of $533 million.
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Their full release follows
SHUAA Capital Saudi Arabia pjsc is pleased to announce today that it has concluded a land acquisition on behalf of the SHUAA Saudi Hospitality Fund I. The SHUAA Saudi Hospitality Fund's acquisition marks the very first private equity fund investment of its kind in the Kingdom of Saudi Arabia. The SHUAA Hospitality fund has a target size of SR 2 billion.
The acquired property is situated in a prime location on the Jeddah Corniche. It boasts spectacular views of the Red Sea and offers easy access to the city centre. 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 sqm, 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.
Jeddah is a strategic investment destination. It has a 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% in 2009, and the number of travelers to Jeddah International Airport increased by 9.2% 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 the Holy Cities of Makkah and Madinah, will be renovated with the aim of handling 30 million passengers by the year 2012.
Mr. Sameer Al Ansari, Chief Executive Officer of SHUAA Capital psc said:
"We are very excited about closing the first ever land acquisition by a hospitality fund in Saudi Arabia and completing the first landmark transaction of SHUAA in the Kingdom. 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."
Omar Al Jaroudi, Chief Executive Officer of SHUAA Capital Saudi Arabia commented:
"The SHUAA Saudi Hospitality Fund is at the core of our private equity platform. The fund provides a unique opportunity to diversify into a Shari'a compliant hospitality and hotel investments - a sector that is 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.
He added: "The land acquisition is good news for the existing investors of the fund, for SHUAA Capital Saudi Arabia and for the city of Jeddah. We are staunch believers in Saudi Arabia and in the prosperous future of the hospitality sector in the Kingdom. Our goal is to start developing the property at the fastest pace possible and to the highest quality standards. We are also committed to contributing to the society by creating job opportunities for Saudi Nationals."
Mr. Selim El Zyr, President and Chief Executive Officer of Rotana, commented: "As the leading regional hotel operator, we have great confidence that the first hotel to be managed by Rotana in Jeddah will be a success. The Kingdom of Saudi Arabia is already a key strategic market for Rotana. 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."
Mr. Diab Chidiac, Director of Real Estate at SHUAA Capital Saudi Arabia summarized: "This is an excellent investment. 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. We believe that our investors will benefit immensely and look forward to acquiring additional strategic assets in the months ahead."
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