DUBAI, (Reuters) – Al Rajhi Capital, the investment arm of Saudi Arabia’s Al Rajhi Bank and Bahrain’s Arcapita Bank has launched a $500 million Gulf property income fund to capitalise on falling prices, the firms said on Monday.

The two companies will seed a joint investment of $50 million for the fund, which will focus on logistics warehouses, healthcare and education-related assets in Saudi Arabia and the Gulf Arab region, they said in a statement.

Saudi Arabia has earmarked around $400 billion to boost infrastructure over the next five years and is looking to cater for growing demand for new housing from the young population in the world’s largest oil exporter.

Al Rajhi and Arcapita have completed the first acquisition for the fund and bought a logistics and distribution centre in the kingdom’s capital, Riyadh, for $79.7 million.

“We believe that this fund is launching at a time that will allow us to deploy our financial resources to gather a portfolio of prime real estate assets at attractive valuations,” Jorge Cantonnet, managing director and head of private equity at Al Rajhi Capital said.

The logistics facility is the main distribution hub for Azizia Panda United Company, a leading supermarket firm in the kingdom, and will be leased back to Azizia over 18 years, the statement said.

Dubai-based investment bank Rasmala Investments said in October it was setting up a 500 million-riyal Islamic ($133.3 million) property fund to pursue opportunities in mid-income housing in Saudi Arabia.

But in Dubai, which has been worst affected in the region by the economic downturn, the emirate’s second-largest developer, Deyaar, postponed earlier in February a 500 million-dirham ($136.1 million) distressed property fund after international investors withdrew previously committed funds.

Property prices in Dubai have plunged some 60 percent since their peaks in 2008 and billions of dollars worth of projects have been put on hold or cancelled.