New GFH fund to target distressed property in the UK

Bahrain-based Islamic investment bank Gulf Finance House (GFH) said on Thursday it is launching Gulf Atlantic Real Estate II (GARE II), a Shariah-compliant fund targeting distressed property in the UK commercial real estate market. 'This fund builds upon the success of GFH's first UK property fund, Gulf Atlantic Real Estate (GARE), which was successfully exited in 2005,' GFH said in a statement.

GFH said the fund launch followed an extensive study of Europe's commercial property markets, which eventually identified the UK as the market with most buying opportunities, mostly due to significant falls in value over the last six months. 'The prices of many good quality buildings have fallen by 25% from their peak and this presents astute investors with the opportunity to lock into compelling income yields,' the bank added.

The fund manager has already identified a number of income-producing properties with which to seed the portfolio. 'Twelve months ago, indiscriminate, highly geared buyers had driven prices far beyond any measure of fair value. Today, with UK commercial property values having fallen so dramatically, we have the opportunity to buy income-producing properties at prices well below their recent peaks. UK commercial property is the market of choice for many international investors who regard it as relatively low risk, transparent and liquid compared to many other markets,' said Nick Judd, head of Real Estate Fund Management at GFH and fund manager of GARE II.

Knight Frank will advise the fund on future acquisitions.