Tuesday, July 1, 2014

Islamic funds increase their confidence in real estate in the region

The Jordanian Ashraf Hamdan began investing in Dubai's property market in 2006 with a modest business rents and then concentrated in more extravagant projects, as a number of luxury developments than the market.

But the housing crisis of 2008 left investors like Hamdan with half-finished projects and difficult to recover losses.

"It was a costly learning experience for a real estate investor. But real estate is in our blood here in the Arab world.'s A tangible investment and from an Islamic perspective, that I find attractive," said the businessman of 53 years.

"I'm just going to start looking for alternatives and brightest to enter the market in future forms," ​​Hamdan said.

The emergence of Islamic funds real estate investment trust (REIT, for its acronym in English) at East Middle East, offering shares in a portfolio with a payment sustained dividend income generated from those assets, might return to investors Hamdan sector.

Islamic REITs differ from their conventional counterparts by banning investment in any asset that pays interest or conducting any business in any industry vetoed as gambling, alcohol or adult entertainment.

Parallel to offer an alternative investment in the Gulf Islamic finance industry could also inject more transparency and regulation, plagued by unrealistic expectations of results and occasionally obscure real estate agreements.

"In the last two or three years, people were frozen in a mode where the focus was on cash and other things," said Daniel Diembers, director of Booz & Company in Dubai.

"The Dubai bubble really helped the housing market matured. This is the time when everything is changing. Much wealth out there," he added Diembers.

Globally, the market capitalization for REITs was close to U.S. $ 570,000 million at the end of 2009, according to a study by Ernst & Young in 2010. REITs Islamic play a small role and Asia functions as the dominant pole supported funds with sharia.

The real estate investment trust Axis Global, based in Malaysia, plans to conduct a public offering of shares (IPO) with an active volume of 1.050 million, making it the world's largest Islamic REIT.

Islamic REITs launched in Bahrain and Kuwait have been relatively small in size: Inovest REIT Mahrab Al Bahrain and Kuwait Tower REIT ripped on less than U.S. $ 95 million of capital each and none were listed yet traded.

But an expected boom in listed infrastructure markets such as Saudi Arabia and Qatar and the launch of the first Islamic REIT in the UAE could maintain confidence in real estate investments, creating more niche to thrive compatible with Shariah funds.

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