Bahrain bank targets EUR 61m Shariah RE fund at Turkey

Bahrain-based Shamil Bank has launched the Shamil Bosphorus modaraba venture capital vehicle to invest $90 mln (EUR 61 mln) in real estate developments in Turkey that compile with Shariah or Islamic Law.

Shamil Bank said it will be subscribing up to 10% of the commitment in the fund 'as a vote of confidence'. The modaraba fund will have an investment term of three years and will target residential and mixed-use real estate development in Istanbul, and secondary homes on the Turkish coast.

The aggregate commitment of the modaraba will be called in tranches with the first tranche being used for the acquisition a plot of land on the European side of Istanbul in the district of Beylikduzu. The 40,000 m² land plotwill be developed as a mixed-use retail and residential complex.

'The remaining tranches will be called as and when needed before the end of June next year to secure the acquisition and developments of other projects already in the pipeline,' the bank said. The pipeline consists of a range of luxury and middle-income residential projects in Istanbul, as well as holiday homes in resort style residential developments on the sea coast of Antalya in southern Turkey.

'Over the last five years Turkey has experienced substantial growth following its recovery from the 2001 economic crisis. On average, Turkey has had a gross domestic product growth of 7.3 per cent from 2002 to last year,' bank CEO Mohamed Hussain said.

Shamil Bank investment banking head Ahmad Tayara added: 'For this Modaraba, we are projecting a return on investment of close to 60pc over the investment term based on a conservative mix of assets catering for different market niches, activities, and geography.'