Islamic REITs to reach record levels in 2008 - Moody's

Islamic real estate investment trusts (IREITs) will experience new record growth both in the Asia-Pacific and Gulf Cooperation Council regions during 2008, Moody's Investors Service has predicted in its 2007 Review & 2008 Outlook: Islamic Finance report.

'Given the phenomenal property boom in these markets, IREITs are a much needed product and a useful investment tool,' the report's author Faisal Hijazi said in a statement. 'Moreover, the potential for growth is aided by the tremendous concentration of high-net-worth individuals and family businesses whose collective wealth in the GCC alone is estimated at over USD1.3 tln.'

In the Arab Persian Gulf region, Dubai Islamic Bank launched Shariah-compliant four-year capital-protected global IREITs in early 2007. The vehicles will invest through several global REITs in the US, European and Asian (mainly Japanese) real estate markets.

Islamic finance is estimated to be worth around $700 bn (EUR 472 bn) annually. Sukuk, or Islamic bonds, are the fastest-growing segment of the market. Global Sukuk volumes reached almost $100 bn by end-2007. The average size of deals increased from $270 mln from $175 mln a year earlier. While the largest proportion of Sukuk was issued in the financial services sector, accounting for 31% of the total, real estate was in second place on 25%.