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Mon 8 Aug 2011 11:50 AM

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Shuaa buys land to build budget hotel in Jeddah

Dubai investment bank says hotel will cost $43m, to be operated by Rotana

Shuaa buys land to build budget hotel in Jeddah
Shuaa posted a small second-quarter net profit of AED0.6m in July

Investment bank Shuaa Capital said Monday its Saudi unit had
acquired land in Jeddah to build a SR160m ($43m) budget business hotel, in a
bid to tap into the kingdom’s growing demand for low-cost travel.

The 254-room hotel, which will have 12,000 sq m of space,
will be managed by Rotana Hotel Management Corp, the company said in an emailed
statement.

Shuaa did not disclose the value of the land, or the contract
with Rotana.

The plot was bought through the bank’s closed-end real
estate fund, the Shuaa Saudi Hospitality fund.

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 travellers and pilgrims.

Shuaa, one of the Gulf Arab region's largest investment
banks, was hit hard by the global financial downturn as impairments related to
troubled assets erased profits.

In the first quarter, Shuaa said it would cut 10.7 percent
of its staff, or 39 jobs, to reduce costs following the regional turmoil which
hit its quarterly results.

The company posted a small second-quarter net profit of
AED0.6m in July.

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