REAL ESTATE - The European Islamic Investment Bank plc (EIIB)’s Pan-European Islamic Real Estate Fund last week announced that it has acquired five commercial properties in a £58.8m (€86.7m) from a fund sponsored by Arab Bank International.
The portfolio acquired last week comprises offices, retail and a distribution unit located in various regions of the UK. The acquisition – the first in the UK between two Shariah (Islamic law)-compliant vehicles – accounts for the core UK allocation of the fund, which has a target size of between €200—500m.
Continental European property will account for the value-added balance of the fund – mostly targeting Central and Eastern Europe because of the potential for higher yields. The fund will target an 11% internal rate of return (IRR).
EIIB head of asset management Jeremy Beswick said the fund would take an opportunistic approach both geographically and in terms of property sub-class, although most will be in and around major cities.
To date, the fund has appealed to Islamic institutional and high net worth investors from the Gulf Cooperation Council (GCC) states and Europe. But Beswick told IPE Real Estate that the fund would "quite possibly" attract non-Islamic investors, including European pension funds.
"There’s nothing to stop them investing," he said, "but there’s a huge Islamic market – and that’s our priority."