NCB Capital, the investment and asset management arm of Saudi Arabia’s National Commercial Bank, has introduced the world’s first Shariah-compliant Alahli Global Real Estate Fund, a fund t
NCB Capital, the investment and asset management arm of Saudi Arabia’s National Commercial Bank, has introduced the world’s first Shariah-compliant Alahli Global Real Estate Fund, a fund that invests in real estate developers across the world.
‘The Alahli Global Real Estate Fund invests in a global market that is currently estimated at USD1.5trn, which is equivalent to 370 per cent growth over the past ten years, and between 2006 and 2007 the market doubled in size, due mainly to major growth in the Asia-Pacific,’ says Sami Abdo, head of NCB Capital Investment Services.
‘Within this large market, the fund trades in the stocks of the most prominent publicly listed companies around the globe whose activities are Sharia-compliant and related to real estate business such as the rental, maintenance, management and development of offices, hospitals, shopping malls, stores, restaurants and hotels.’
The launch of GREF has taken the Kingdom’s investment market by surprise, since it follows only one week after the launch of the NCB Capital BRIC Secured Fund. Such rapid response to market demands more than demonstrates NCBC’s commitment to offering its customers more – and at a more frequent rate than ever before – and shows that NCB Capital is wasting no time in consolidating the leading position that it has already attained.
According to NCB, with a minimum subscription of USD2,000, the NCB Capital GREF provides investors with an easy and convenient opportunity to participate in investing in the shares of real estate companies, rather than the costly and time consuming process of the direct buying. The advantage in this approach is that the fund offers more liquidity to the investor than real estate property.
In introducing the Global Real Estate Fund, NCB Capital is bringing a new alternative asset class, real estate investment trusts, to the Saudi market. Reits, which are like stocks for the commercial real estate industry, have high liquidity and offer higher than average returns with lower volatility. Companies listed as Reits do not get taxed at corporate level on their income because at least 90 per cent of their profits are paid out to shareholders, offering higher returns.
‘Due to economic and population factors, the size of the global real estate market is expected to grow rapidly over the next few years and is projected to continue increasing for many more years to come,’ says Ayman Bajsair head of product development at NCB Capital Investment Services. ‘GREF provides what the market has been demanding and puts this sector within reach of all investors, while selectively ensuring that participation is contained within the fast expanding Shariah compliant segment.’
Summing up the advantages of this innovative new Fund, Sami Abdo concludes: ‘In our commitment to look for more for our clients, we have introduced a world class opportunity to invest in the global real estate market, a sector which is a key component in a well balanced and diversified portfolio, and the NCB Capital Global Real Estate Fund makes it so easy for investors to get into this important new asset class without delay.’
