DUBAI, (Reuters) – Shuua Capital’s Saudi Arabian unit said its hospitality fund had bought land in Jeddah for a hotel development worth more than $130 million, the first ever land acquisition by a hospitality fund in the kingdom.

The fund, worth over $500 million, is tapping growing demand for hotels in the world’s largest oil exporter and will build a luxury project in the Red Sea city worth 500 million riyals ($133.3 million), Shuaa Capital Saudi Arabia said.

“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,” the firm’s chief executive, Omar al-Jaroudi, said.

An increasing number of Gulf firms have recently announced funds to tap opportunities in the kingdom’s property sector.

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

Al Rajhi Capital, the investment arm of Saudi Arabia’s Al Rajhi Bank, and Bahrain’s Arcapita Bank in February launched a $500 million Gulf property income fund.

Dubai-based Rasmala Investments said in October it was setting up a 500 million-riyal Islamic property fund to pursue opportunities in mid-income housing.

However, in Dubai, which has been worst affected in the region by the economic downturn, the emirate’s second-largest developer by market value, Deyaar, in February postponed a 500 million dirham ($136.2 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.