From: Islamic Finance Information Service [mailto:[email protected]]
Sent: Wednesday, October 14, 2009 1:51 PM
To: [email protected]
Subject: Islamic Real Estate Finance Summit '09
<http://securities-global.com/7K-26VA-TUHSE-1AV3H-1/c.aspx>
Islamic Real Estate Finance Summit '09 - Preparing for Long Term Economic
Growth
<http://www.islamicrealestate.com/iref2009/mailshot/endorsedby.jpg>
<http://www.islamicrealestate.com/iref2009/mailshot/ifis.jpg> In some respects
the global economic slowdown and the crisis in the financial markets, and its
impact on real estate assets and financing, has been a blessing in disguise.
For the real estate market, especially in the Middle East & North Africa (MENA)
Region, where people have been predicting corrections ad nauseum over the last
decade, it has been a forced pause for reflection, the jettisoning of excesses,
the tightening of regulation and perhaps above all preparing for the next wave
of market opportunities as and when long-term sustainable economic recovery and
growth returns.
Analysts including Nobel Laureate Paul Krugman, Professor of Economics at
Princeton University, and Professor Laura Tyson of Haas Business School and an
economic adviser to US president Barack Obama, for instance, speaking at the
World Capital Markets Symposium held in Kuala Lumpur in August 2009 concurred
that global economic recovery led by the US and Europe could start in the first
half of 2010, although a sustainable solution to the global financial crisis
remained elusive.
Already in the major markets of the world there are green shoots of recovery
emerging, and Islamic financial institutions (IFIs) are already leveraging new
opportunities ranging from quality niche portfolios in commercial property let
on long leases to strong covenants and bought at a discount to the long term
trend; distressed sales; entering exciting new property markets less affected
by the global credit crunch; to specialized sectors such as affordable housing,
urban regeneration and infrastructure.
Islamic real estate finance and investment opportunities going forward will be
confined to specialized markets offering well-defined opportunities. While this
applies to traditional markets such as the US and the UK, there are increasing
signs of geographic diversification to newer markets in China, Malaysia,
Australia and Singapore.
In the core GCC countries, Saudi Arabia and Qatar offer the most exciting and
sustainable proposition. In the case of the Kingdom, this is backed by
demographics, an estimated project spend of over $160bn over the next five
years or so, and a housing demand that is mouth watering for both developers
and mortgage providers; and beyond the GCC countries such as Turkey offer good
niche sustainable opportunities.
Similarly, the days of purely vanilla realty transactions may be numbered, with
investors seeking perhaps less volatile but value added returns. Here real
estate backed or based Sukuk; PFI (private finance initiatives); PPP (Private
Public Partnerships); Real Estate Investment Trusts (REITs); Sustainable
Alternative Housing Finance Schemes including Shared Ownership; and specialized
private equity and real estate funds may pave the wave of the next generation
of Islamic real estate financing offerings.
The month of August 2009 saw the return of Islamic banks and investors to the
US market, a potentially important development given that the new
administration of President Barack Obama is putting put feelers to Islamic
investors perhaps to participate in opportunities aimed at stimulating the
recovery of the US economy.
Kuwait Finance House (KFH) in August 2009 signed a $450m joint venture
agreement with UDR Inc., a leading US-bases real estate investment company, to
acquire various top-class high value residential portfolios in selected US
metropolitan areas. Ali Al-Ghannam, Head of International Real Estate
Department at KFH, has been spearheading the KFH forays into the US and other
markets including Shenzen in China where KFH has also launched a $500m Real
Estate Fund with a local partner; Russia and Australia.
According to Ali Al-Ghannam (Head of Real Estate, KFH), the joint venture will
target ‘Class A’ property portfolios with high income producing assets which
are less than seven years old and with a minimum value of $120m. The joint
venture is targeting an internal rate of return (IRR) of 12 – 14 per cent per
year.
In the Middle East, the equities and the realty markets moved from ‘irrational
exuberance’ to ‘irrational caution’ in a space of five years. The challenge for
investors is to maintain a ‘rational sustainability’ in their behaviour.
According to research published by Credit Suisse in July 2009, the Saudi real
estate market offers a strong growth opportunity and is better positioned than
other GCC markets. The growth and demand drivers of the Saudi real estate
market according to Credit Suisse are:
* The Saudi government is committed to development expenditure in the
2009 budget - an increase of 36 per cent on 2008.
* The country has a young population some 55 per cent under the age of 25
years. Therefore the Saudi demographics are favourable and has a strong demand
outlook. Credit Suisse estimates that demand for housing in the Kingdom will
reach at least 1 million units over the next five years.
* The new mortgage law which is currently in the final stages of approval
could increase the number of first time home buyers as less than half the
population own their homes. Consumer finance in Saudi Arabia was less than 0.9
per cent of GDP at end 2008.
* The Kingdom is perhaps the most attractive real estate market both in a
regional and global context with average residential selling prices at a 58 per
cent discount to the MENA average. In addition, Saudi residential and office
markets offer above-average rental yields.
* Saudi Arabia, despite having 65 per cent of the total GCC population,
only accounts for 45 per cent of total GCC retail gross leasable area (GLA).
Thus the opportunity for retail growth is huge.
Indeed, in May 2009, Dar Al Arkan Real Estate Development Company (DAAR), the
largest real estate developer in Saudi Arabia, closed its third Sukuk – a
SR750m offering – to part finance the company’s new residential projects such
as Al-Qasr in Riyadh; Al-Tilal in Madina and Qasr Khozzam in Jeddah.
In the UK, Gatehouse Bank in August 2009 launched the GBP350m London Office
High Income Recovery Fund whose investment strategy is to acquire real estate
portfolios in the office sector in Central London and Greater London let on
long leases to quality tenants.
According to Gatehouse Bank, real estate forms an essential component of a
multi-asset portfolio. Middle East investors still tend to prefer ‘bricks and
mortar’ assets as opposed to equities and bonds, which as asset classes are
still under-developed in their breadth and depth in regional capital markets.
Real estate, according to Gatehouse Bank, offers a physical asset with an
inherent value backed by secure contractual cash flows. Returns can be enhanced
through financial structuring. It allows for diversification of risk and a
hedge against inflation. And real estate is less volatile and higher yielding
than other asset classes.
Despite the economic recession, the UK remains a major global property
investment market (for both industrial, retail and office) with string
fundamentals especially the recovery of Sterling which has made UK property
inherently cheaper in US$ terms.
The UK economy is forecast to start recovery in 2010 with a return to long term
growth trend over the next three years. The sector is also capitalising on the
positive impact of the 2012 London Olympics and of major planned infrastructure
projects such as GBP16bn Crossrail, the largest construction project in Europe.
These opportunities are beckoning for tranche participation of Islamic
financial solutions.
Malaysia is also expected to attract greater inward investment flows in the
real estate sector as the South Johore Development Project starts to gain
momentum. The uptake by GCC investors of MM2H (Malaysia My Second Home) has
also been encouraging with KFH and Alrajhi bank both offering Islamic mortgage
finance options to potential buyers.
Australia is also emerging as an exciting new property investment location for
Islamic investors. In March 2009, LM Investment Management Ltd, for instance,
launched the LM Australian Alif Fund - a 3-year fixed term unit trust and the
primary asset is real estate. The investment will be in a portfolio of real
estate assets in different parts of Australia across a variety of sectors such
as construction, industrial, retail or residential (retirement villages).
With all these market dynamics, the annual IREF 2009, which will be held this
year on 4th - 5th November 2009 at the Radisson Hotel in Central London, could
not have come at a more opportune time. Real estate will always remain an
attractive investment asset class for Middle East investors both in the region
and out of the region.
As such IREF 2009 is the real estate event which anyone interested in the real
estate market in the UK and GCC whether as a regulator, player, financier,
structurer, investor, speculator, analyst or simply as an interested party,
cannot afford to miss!
Book online today to avoid disappointment at www.islamicrealestate.com
<http://securities-global.com/7K-26VA-TUHSE-1AV3H-1/c.aspx> . For more
information please contact: [email protected] or alternatively call us on +44
(0) 208 200 9002.
<http://securities-global.com/7K-26VA-TUHSE-1AV3H-1/c.aspx>
www.islamicrealestate.com
| Summit Secretariat | IREF '09 | ICG, First Floor Albion House, 470 Church
Lane, Kingsbury, London NW9 8UA, UK |
| Tel: +44 (0)20 8200 9002 / +44 (0)20 8819 4487 / +44 (0)20 8099 6466 | Fax:
+44 (0)203 157 1025 | Email: [email protected] |
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سياسة النشر في المجموعة:
- ترك ما عارض أهل السنة والجماعة.
- الاكتفاء بأمور ذات علاقة بالاقتصاد الإسلامي وعلومه ولو بالشيء البسيط. ويستثنى
من هذا مايتعلق بالشأن
العام على مستوى الأمة كحدث غزة مثلا.
- عدم ذكر ما يتعلق بشخص طبيعي أو اعتباري بعينه. باستثناء الأمر العام الذي يهم
عامة المسلمين.
- تمرير بعض الأشياء الخفيفة المسلية ضمن قواعد الأدب وخاصة منها التي تأتي من
أعضاء لا يشاركون عادة، والقصد من ذلك تشجيعهم على التفاعل الإيجابي.
- ترك المديح الشخصي.
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