The project is part of a mixed-use development which will cover an area of 3,000 square metres and will include villas, residential compounds and offices, as well as the hotel.
Barwa will take a 49 per cent stake in the project, with the remaining 51 per cent to be held by the Libyan Development & Investment Company. The deal, which was signed on 26 June, is worth $2bn.
Barwa has said it will also invest in an energy project in the country.
A new $2bn joint investment fund will be set up by Qatar and Libya, along with a new bank with capital of $500m.