Islamic Investor: Islamic Investor: - Islamic Finance News

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FEATURE investments in Islamic REITs is the growing number of Gulf investors investing in Asia. “The take-up among Gulf investors for future Islamic REITs will be a lot greater. At the moment there is no timeline for when other issuers will come out with Islamic REITs, but I would expect more in the fi rst or second quarter of next year,” revealed an industry player. Singapore and Malaysia are currently leading the pack, with the most number of I-REIT issuers, while Middle East players have exhibited interest, but are clearly still testing the waters. Singapore-based Sabana REIT is currently the world’s largest Shariah compliant property trust, having sold 508 million units at S$1.05 (US$0.87) each in its IPO last year. The IPO was 2.5 times oversubscribed. Last year, Dubai Islamic Bank launched the emirate’s fi rst Shariah compliant REIT in a joint venture with French property fi rm Eiffel Management, in a bid to revive the UAE’s suffocating real estate sector. Although real estate investments are considered less risky compared to other forms of equity investments for instance, an industry player revealed that the current market conditions do not do justice to this asset class. “It is very much dependent on geography at present, due to fl uctuations in real estate prices. Markets such as Hong Kong, Malaysia and Singapore are clearly faring better at present, and although REITs typically generate good income for investors, it is still not very popular in the UK due to the soft property market, tax and structuring issues. However, if this can be overcome, there will be a better scope for Islamic REITs in the UK, but I foresee a more local market for such products as opposed to attracting foreign investors in the UK.” “However, it is clear that Shariah compliant REITs create higher quality investments because the screening process looks at both the underlying asset and the usage of the asset, and does not allow for speculative or risky investments,” he added. According to a recent report by Saudi-based AlJazira Capital, the prospects for Islamic REITs in the country are promising: “After gaining popularity in Asian countries such as Japan, Singapore and Malaysia during the last fi ve years, REITs are set to gain a foothold in GCC countries, especially Saudi Arabia given the signifi cant potential for Islamic REITs in the kingdom. The trend for Islamic REITs was set in May 2006 when Malaysia launched the IPO of the fi rst-ever Islamic REIT. Within the GCC region Saudi Arabia, which facilitated the launch of the region’s fi rst Islamic REIT, leads the way. The Islamic REIT market in Saudi Arabia is still in the early stages of development but holds signifi cant potential in our view.” Among the factors infl uencing a potential Islamic REIT boom in the country include strong real estate sector fundamentals, and an increasing appetite among investors for less risky returns: “Despite the recent downturn, the long-term fundamentals of Saudi Arabia’s real estate sector continue to remain intact. Our optimism is largely driven by factors such as the country’s favorable demographic profi le, economic diversifi cation, expected implementation of the new mortgage law and sound macroeconomic fundamentals. Shariah compliant products have also been gaining popularity in Saudi Arabia due to the country’s large Muslim population, which is very receptive to such products and services. The recent stock market crash has also increased retail investors’ appetite for stable returns. Products such as REITs could benefi t from this as they provide stable returns with the benefi t of diversifi cation,” the report added. However, in order for the Saudi Islamic REIT market to grow, steps such as establishing a universal Islamic REIT guideline, increasing cross-border trading and enhancing the secondary market for Islamic instruments are key. There is no doubt that Islamic REITs will continue to grow in popularity due to their natural compliance with the Shariah, their tangible nature, and their investment in the real economy. Islamic REITs also cater to investors who are seeking viable investment avenues to channel their funds, and provide them with selected projects that yield good returns and a stable income. 8 September 2011
The IFN Country Briefings are specifically designed to give participants an in depth understanding of the recent developments in Islamic finance in selected markets. Topics and speakers are carefully selected to give Islamic finance professionals a concise and succinct update in a one-day, multi speaker format. To stay updated on the very latest Islamic finance issues affecting these countries don’t miss the following IFN Country Briefings: Upcoming Country Briefings Cairo, Egypt 30 th October 2011 Toronto Canada 8 th November 2011 New York, USA 10 th November 2011 Hong Kong, China 15 th November 2011 For more information visit www.islamicfinancebriefings.com or call +603 21627800 Presented by:
Page 1 and 2: September 2011 Islamic Investor: Eq
Page 3 and 4: EDITOR’S NOTE Supplements Editor
Page 6 and 7: COVER STORY Equities Vs. Commoditie
Page 8 and 9: COVER STORY futures market to estab
Page 12 and 13: Global industry One publication Est
Page 14 and 15: FEATURE or country-focused ETFs, wh
Page 16 and 17: FEATURE Source: Eurekahedge conduci
Page 18 and 19: CHAPTER Islamic Hedging & Risk Mana
Page 20 and 21: CASE STUDY Executive chairman of AP
Page 23 and 24: STATEMENT Beyond Banking Global Isl
Page 25 and 26: CHAPTER World Islamic Index’s out
Page 27 and 28: RESULTS Crème de la Crèmé The in
Page 29 and 30: RESULTS Best Asset Management Compa
Page 31 and 32: RESULTS Best Real Estate Investment

Islamic Investor: Islamic Investor: - Islamic Finance News

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