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Sun 26 May 2013 12:46 PM

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UAE firm sets up $120m UK property fund

Set up in Abu Dhabi, the sharia-compliant fund will target prime real estate in London

UAE firm sets up $120m UK property fund
(Getty Images)

A London-based UAE investment and asset management firm has set up a $120m sharia-compliant fund aimed at Gulf investors looking to invest in prime property in the British capital.

Amaanah Investment Group is aiming to close its first purchase in the coming months, a senior executive at the firm told Arabian Business.

Amaanah was originally set up in Abu Dhabi by Emirati businessman Haashim Al-Rifai and is now permanently based in London.

Backed by a number of prominent silent Abu Dhabi investors, the size of the fund currently stands at £30m ($45m), while Al-Rifai aims to cap this at £80m ($120m) by the end of the year.

“Prime property in the capital continues to offer solid growth potential, and London has cemented its status as a safe haven due to its stable political system and transparent legal structure,” said Al-Rifai.

“New York and London are off limits to individual investors but we aim to open that market to average investors who found it hard to invest in London,” he added.

The fund is looking to target properties between 1800 sq ft and 3000 sq ft and located in the Mayfair, Belgravia, Chelsea and St John’s Wood areas, which currently sell for around £3-5m.

Al-Rifai said the fund is currently looking at a number of potential properties and is aiming to close its first deal “within the next few months.”

According to the Rightmove House Price Index, the average price in the prime Kensington and Chelsea borough is £2,357,306 and prices rose by around 12.4 percent in the 12 months to April 2013. This is compared to an average increase of 6.9 percent year-on-year across the UK.

“Prices of prime residential homes in London have increased 27 percent since 2007, and we expect prices in the capital to continuing growing by 13 percent over the next two years,” Al-Rifai said. “We also expect rents to increase by about eight percent this year, which provides a solid return for potential investors.”

The fund is one of a number of funds set up in recent years to target the UK property sector. Two years ago, UK-based entrepreneur James Caan, most famous as star of the BBC’s ‘Dragon’s Den’ TV series, undertook a tour of the Gulf in a bid to drum up investment interest in a £45m ($69m) student housing fund.

“When you think today that half the world’s population today is Muslim, as a businessman I see this as one of the biggest growth market opportunities that is under-exploited,” Caan told Arabian Business.

“Potentially over the next five or ten years I can see this as being a very attractive position. I think there is an incredible increase in demand for Sharia-compliant opportunities and products.”

Sharia law forbids gambling, investments in alcohol and receipt of interest, so fund managers have to select investments deemed halal, or permissible.

“Most of the product that we have sourced is UK-based,” Caan said. “The UK is a natural place that I think Middle East investors find very comfortable, because of the governance, the laws and the transparency.”