Knowledge Economic City has announced a 1.5 billion Saudi riyal ($393 million) fund to develop two hotels and 295 branded residential units in Islam’s second holiest city, Medina, Saudi Arabia.
Alibad Capital is slated to manage the fund in the city, which is the site of the Prophet’s Mosque or Al-Masjid an-Nabawi.
A Saudi Arabian publicly listed joint-stock company, KEC’s task is to develop and transform Medina as part of the country’s Vision 2030 project into “a modern connected city by developing vibrant lifestyle destinations within the sacred boundary of the [Great Mosque of Mecca]," according to its website.
The firm will develop the first phase of the Multaqa Hospitality Project, which includes two hotels under the umbrella of Marriott International, it said in an announcement on the Saudi Exchange.
The agreement is for a “non-binding term sheet with Al Bilad Capital to appoint it as the fund manager for the establishment, offering and management of a closed-ended private real estate investment fund to finance the development of Multaqa Hospitality Cluster 1 within the company’s Multaqa Almadinah project.”
A 288-room JW Marriott will complement another Marriott-branded hotel with 327 rooms.
According to Saudi Arabia’s General Authority for Statistics, more than 1.7 million international pilgrims came to the two Holy Cities of Mecca and Medina during the Hajj period in the country, which spanned from May 25 to May 30 in 2026.
KEC added the fund will broaden to include the “participation of financial institutions in supporting its development strategy, particularly in the hospitality sector and other strategic asset classes.”
International capital is now permitted full ownership in hospitality projects.
According to legal firm Clyde & Co., a February 2025 change in Saudi investment law — Ministerial Decision 1086 pursuant to Royal Decree No. M/19 — now allows 100% ownership in some sectors.
The Multaqa development is adjacent to the Haramain Highspeed Railway, a 280-mile network that opened in 2018 and links Medina and Mecca to Jeddah, King Abdulaziz International Airport and King Abdullah Economic City.
There has been concern that the U.S.-Iran conflict and subsequent falls in energy prices and demand might force the Saudi government to reduce the scope of or cancel some hospitality projects.
CoStar News Hotels reported in May that, ”despite shifts and setbacks, hoteliers investing in Saudi Arabia are confident in the long-term strategy of the country’s ruling officials to build economy-boosting tourist hotspots across the country, with the goal of lessening its dependence on oil in the long run.”