Indonesian Fund Danantara Buys Hotel in Makkah for SAR 2 Billion

Indonesia's sovereign wealth fund, Danantara, completed the purchase of a hotel and 4.4 hectares of development land in Makkah for 2 billion Saudi riyals ($533 million), according to Asia Asset Management magazine. The deal was executed through the fund's subsidiary, Danantara Investment Management.

The transaction includes the 1,461-room Novotel Thakher Makkah hotel and plots of land within the Thakher Makkah project. The fund stated in a press release issued on October 19 that the investment will support the development of accommodation and services dedicated to Hajj and Umrah pilgrims to the Holy Mosque.

The land is set to be developed in phases into hospitality facilities, retail shops, and supporting services, in partnership with Saudi developer Al Khumasiya Real Estate Group, subject to feasibility studies and regulatory approvals. The identity of the seller was not disclosed in the transaction statement.

Rosan Roeslani, CEO of Danantara Fund, said the acquisition is a step toward building a long-term investment platform in Saudi Arabia's hospitality sector. He added that the fund's focus is on managing these assets with investment discipline and developing an integrated ecosystem that elevates the quality of accommodation and services available to Hajj and Umrah pilgrims from Indonesia and around the world, noting that the fund will explore other opportunities in Madinah and in sectors beyond real estate.

What do these terms mean?

Sovereign Wealth Fund: An investment fund owned by or affiliated with a state, which invests its financial surpluses in assets inside and outside the country to achieve long-term returns.

Hectare: A unit of measurement for land area; one hectare equals 10,000 square meters, roughly equivalent to one and a half football fields.

Feasibility Study: A detailed evaluation conducted by an investor prior to implementation to ensure the project will generate sufficient returns to cover its costs and risks.