Shamil Bank announces strong pipeline of investments in high-growth China real estate market

The Modaraba, which is the first-ever, Islamic, real estate fund for investment in the Chinese real estate market, was met with strong investor demand from across the GCC region. The Modaraba was subscribed to by high net worth individuals and financial institutions including some conventional banks. These investors were eager to access the right opportunities for further portfolio diversification and a sound investment structure through which they could enter the high growth Chinese real estate market.

Proceeds from the Modaraba will be invested in select real estate investments in China that could potentially produce returns of 18% IRR and above while focusing on land, residential, commercial and industrial properties or development projects. Modaraba funds will be channelled through a fund established and managed by Shamil Bank and its local Chinese partner, CITIC International Assets Management ("CIAM"), the asset management arm of CITIC Group, a major state-owned Chinese conglomerate.

The two partners are jointly sourcing, evaluating and executing all transactions through a Sharia'a compliant investment structure in order to achieve returns from capital appreciation

"After the launch of this pioneering fund only four short months ago, we are working towards reviewing as many project concept papers as possible and will carry out full fledged due diligence on those that are most promising. We have already selected a few compelling deals, which we expect to announce shortly," said Mr. Ahmad Tayara, Head of Investment Banking, at Shamil Bank.

These include greenfield developments of mixed-use residential and commercial properties. Specifically, these projects will be geared towards the middle income segment in secondary and tertiary cities where strong returns are still achievable.

Mr. Tayara continued,

"Working in conjunction with our Chinese partners, we are keen to ensure that an interesting pipeline of business will continue to develop and that we are well positioned to access those deals that can help to maximise returns for investors of the Shamil China Realty Modaraba."

The Shamil China Realty Modaraba is yet another product developed by the Bank that is aimed at ensuring that investors can minimise their exposure to any single market or asset class. In addition, it also provides access to opportunities in high growth emerging markets that investors and institutions may be reticent to pursue on an individual basis. Shamil Bank is committed to bringing such opportunities to its clients and views China to be a key investment market, which it intends to fully explore.

The Chinese economy has been growing at an average annual rate of more than 9% over the past two decades and the real estate sector, which has shown robust growth of more than 20% over the last four years, is expect to continue its strong performance. Rapid urbanisation and increasing demand for better housing and quality commercial space will continue to drive growth and create numerous opportunities across the sector.

Commenting on the Bank's groundbreaking venture into China, Mr. Abdul-Hakim Al-Mutawa, Head of Private Banking at Shamil Bank, said: "Shamil Bank is committed to utilising all of its resources and expertise in order to deliver innovative investment products of high-growth potential to our investors.

"Our track record in structuring and executing global Sharia'a compliant transactions, combined with our partner's deep knowledge of the Chinese real estate sector, has already led to the identification of unique and sound investment opportunities, which we believe meet the strong investment criteria of the Bank and the expectations of our investors."

The Shamil China Realty Modaraba offers a rate of return estimated at 18% over its four-year term.