ProLogis, the world’s largest industrial real estate investment trust, and Bahrain-based Islamic investment bank Arcapita Bank BSC agreed to start a venture to develop warehouses in the Persian Gulf region.

The equally owned venture, ProLogis Middle East, will build and buy $1 billion worth of logistics and warehousing space in countries including Saudi Arabia, Kuwait and Qatar, the companies said in a joint statement e-mailed by Arcapita on Tuesday.

“Local and multinational companies will increasingly demand modern distribution centers to serve the region’s growing needs,” Jeff Schwartz, chief executive of Denver-based ProLogis, said in the statement.

ProLogis and Arcapita will compete with companies including Kuwait-based Agility, the Middle East’s biggest storage and logistics company. UBS AG, HSBC Holdings Plc and Deutsche Bank AG are among banks investing in funds to build roads, airports and power plants in the gulf. Middle Eastern and North African governments will spend more than $300 billion on public infrastructure development by 2016 as they seek to develop their economies and attract investors, HSBC estimates.

ProLogis Middle East is to start its first project in Saudi Arabia during the second half of this year, according to the statement.

ProLogis is expanding in emerging markets to take advantage of growth in international trade and has properties in 118 countries.