Islamic Trusts Could Revive Gulf Property Market

June 9, 2011 by · Leave a Comment 

By Shaheen Pasha

2011-05-28T211614Z_2103306788_GM1E75T0ESH01_RTRMADP_3_EMIRATES

A dhow sails during the Al-Gaffal 60ft traditional dhow sailing race between the island of Sir Bu Nair near the Iranian coast, and Dubai May 28, 2011.

REUTERS/Stringer

DUBAI, June 2 (Reuters) – Jordanian Ashraf Hamdan began investing in Dubai’s real estate market in 2006, with a few modest rental investment forays before turning his sights on flashier projects as a wave of luxury developments hit the market.

The real estate bust in 2008 left investors like Hamdan with half-finished projects sitting in the desert sun and losses that were unlikely to be recouped.

“It was a costly learning experience for a real estate investor,” said the 53-year-old businessman. “But real estate is in our blood here in the Arab world. It’s a tangible investment, and from an Islamic perspective, that appeals to me.

“I’m just going to be looking for smarter, alternative ways to get into the market in the future.”

The emergence of Islamic real estate investment trusts (REIT) in the Middle East, which offer the chance to own shares in a portfolio of real estate assets with a steady paid dividend from the income earned on those assets, may lure investors like Hamdan back to the sector again.

Islamic REITS differ from their conventional counterparts by banning investment in any assets that pay interest or conduct business in any forbidden industry, like gambling, alcohol or adult entertainment.

Aside from providing an alternative investment in the Gulf Islamic finance industry it could also inject more transparency and regulation in a property sector plagued by unrealistic expectations of returns and occasionally murky dealings.

“Over the last two or three years, people have been in freeze mode where the focus was cash and other liquid things,” said Daniel Diembers, principal at Booz & Company in Dubai.

“The Dubai bubble really helped the (property) market to mature. Now is the moment where it is all shifting. There is a lot of wealth up for grabs.”

Globally, the market capitalisation for REITs was around $570 billion at the end of 2009, a 2010 Ernst & Young study said. Islamic REITs play a small role, with Asia serving as the predominant hub for sharia-compliant trusts.

Renewed Confidence

Malaysia’s Axis Global Industrial real estate investment trust (REIT) is planning an initial public offering with an asset size of $1.05 billion, making it the world’s largest Islamic REIT.

Islamic REITs launched in Bahrain and Kuwait have been relatively small in size – Bahrain’s Inovest REIT and Kuwait’s Al Mahrab Tower REIT launched with less than $95 million in capital each – and neither has been publicly listed.

But an anticipated infrastructure boom in hot markets such as Saudi Arabia and Qatar and the launch of the UAE’s first Islamic REIT may buoy faith in real estate investments, creating a wider niche for the Sharia-compliant trusts to thrive.

Emirates REIT, which launched with seed capital from Islamic lender Dubai Islamic Bank last November, is aimed at medium-income investors and offers returns of 6 to 8 percent annually, said Mark Inch, director of Eiffel Holding and founding shareholder of Emirates REIT.

“There is a discipline and transparency that comes with a regulated REIT,” he said. “Buildings will not only be properly managed but financial management will also be completely transparent. It’s a prerequisite of bringing back confidence.”

Emirates REIT has 40 deals under review ranging between 40 million dirhams to 500 million dirhams and will be fully operational by the summer, Inch said. An initial public offering is planned within 18 months to two years once it secures assets of 1.5 billion dirhams.

The interest is growing. National Bank of Abu Dhabi is considering creating an Islamic REIT while the FTSE Group may develop an Islamic REIT index as the industry grows globally, officials at both said.
The Gulf region has dabbled in the REIT market over the years with little success.

A 2008 Islamic REIT launched by Saudi Arabia’s Sumou Holding and Geneva-based Encore Management fizzled in the kingdom as the financial crisis sapped enthusiasm. Other attempts to launch a REIT in the region, including a conventional one by troubled property developer Nakheel, were quickly squashed.

Asia, by comparison, has seen a boom in sharia-compliant REITS. Malaysia, considered to be at the forefront of Islamic finance, launched its first Islamic REIT in 2006. Singapore’s Sabana REIT, launched in 2010, was 2.5 times oversubscribed and saw heavy investor interest from the Gulf.

The Gulf has been held back by the slow pace of innovation in the real estate sector, as well as the Islamic finance industry in general, experts said.

In contrast to Malaysia, where the government is active in creating a strong regulatory environment, there is no regulatory standardisation in the Middle East. And investors are understandably wary of investing in a new real estate venture given the spectacular property collapse in the region.

Oz Ahmed, associate director of wholesale banking at HSBC Amanah in Malaysia, said Mideast investors seem ready for homegrown REITS given the high participation in Asian ones.

“There’s definite potential for issuers within the GCC to identify assets but people have to become comfortable with them,” he said.

“We’ve gotten to the point where we’re working well in the banking paradigm. Now practitioners are looking to develop products that come closer to Islamic finance principles.” (Editing by Amran Abocar and Jon Hemming)

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Journalism: An Islamic Perspective

May 6, 2010 by · 3 Comments 

By Musa Odeh

Editor’s note:  The TMO Foundation conducted a scholarship essay contest and TMO is now printing the essays of some of the entrants to the contest.

This is the essay of a $500 scholarship winner, by Musa Odeh, on the subject “Journalism:  An Islamic Perspective.” He received a $500 scholarship.

Moosesuit

It was the morning of September 11, 2001.  Hijackers overtook a commercial plane and smashed into the north tower of the World Trade Center.  As the world watched the building diminish and burn to the ground, a second airplane collided into the south tower like a guided missile in a war zone.  It took two hours, and the World Trade Center was no more. The attacks of September  11th would be remembered forever as the worst attack on U.S. soil.  The World Trade Center would never be the same again. The United States would never be the same again. The world would never be the same again. Islam would never be the same again.

My life changed on September 11th as the U.S. launched a “War on Terrorism.”   The media began to portray Islam as an enemy towards mankind, especially here in the West.  Islam was the new face of the public enemy, and this was not justified.  False portrayals of Muslims as terrorists forced me to take action.  The word “terrorism” has become a synonym to “Islam.” 

I have taken it upon myself to prove otherwise.  I feel it is my obligation to show the other side of the story.  It is my calling to battle skewed reports and unbalanced coverage of Muslims in the media.  It is my job to shed light on the truth.  In a time of war and hate crimes against Muslims, it is I who shall show the world the truth–by fighting and battling–because in the end, the pen is mightier than the sword.

When I was younger, my mother used to tell me to pick my battles and choose them wisely.  If something was not a good idea to pursue, she would tell me, “This is not your fight.  Let it go.”  She also taught me to never start a fight I couldn’t finish.  I never really understood her advice until today.  Showing the world the truth and reporting the facts is my fight.  It is a battle I wisely choose to fight and it is definitely my struggle.  This is a fight I will not back down from and I am determined to stand tall because I cannot be defeated in this fight.

I chose to be a journalist because I want to be an advocate for Islam and show the true meaning of the religion from a broad perspective.  Islam has been covered in the media through a tainted and biased lens and I feel that journalism chose me, to find the stories that dig deeper into human interest and show the truth of Islam and its followers.  When I watch the news, I feel so much more strongly about this cause.  I feel it is my duty to speak on behalf of the oppressed Muslims who are portrayed as monsters, the law abiding, hard working Muslims who are looked down upon because of their faith. 

I want to become a journalist because I enjoy learning and interacting with people.  I would write and report stories that show people something they did not know before reading my piece.  It is my goal to report the story that nobody else has ever thought of.  The story is not about me, it’s about the people I am interviewing. The story is also about the communities I am working for.  I want to publicize the stories of the little people, who without me would not have had their story told to the world or their voices heard.   Helping people and communities is all the compensation and reward I need for being a journalist.  My long term goal is to win a Pulitzer Prize for the phenomenal work I have done to help people tell their stories and to allow their voices to be heard.

By definition, a journalist is someone who gathers or broadcasts news to the public.  In all honesty, I feel there is no correct or accurate definition of the word “journalist.”  My ultimate goal is to find a job as a reporter and/or writer for the mainstream media of the U.S.  I want to bring out the truth and report stories that show the actual face of Islam and its followers.  For example, I would love to cover Muslims in the Dearborn area and show the world how Muslims live on a day to day basis, by showing that they have close family ties and work every day jobs.  It is my hope that the biased world would be able to relate and the “terrorist” image would begin to fade away.  I want to be the reporter who shows what Muslim life is actually like. Contrary to the western mentality of Muslims sitting around in “madrasas” all day plotting their next act of evil; when in reality, those thoughts are non-existent.

As a Muslim who tries his best to live his life by Islam, I feel that it is my responsibility and obligation to portray Islam in a positive light. I do that through my interactions with people on a daily basis by showing how Muslims deal with others in a kind and respectful manner. Islam was first spread by merchants who went to faraway lands that had never heard of Islam.  It is through their positive interactions with non-Muslim merchants and citizens that they influenced the communities they stumbled upon. 

When the followers of other religions witnessed the respectful, honest and fair ways of the Muslims they began to inquire about this religion.  The kindness of Islam draws people closer and closer to the religion.  Muslim merchants’ mannerisms were exemplary, to the point that it piqued people’s interest and motivated them to inquire about the religion.  That helped the spread of Islam.  Muslim merchants led by example and became ambassadors of Islam– as I plan to do in my daily works as a Muslim journalist—God willing.

Becoming a journalist is hard enough, but becoming a Muslim journalist is ten times harder.  A Muslim journalist must be perfect in every aspect of his job because his actions are already magnified from day one.  As a Muslim journalist, one will be criticized and ridiculed because of the religion he/she chooses to follow.  This forces the Muslim journalist to have thick skin and be flawless in the work of reporting, as well as extremely accurate with facts and sources.  A hiccup for a Muslim journalist is viewed as a heart attack to the rest of the world.  All eyes are on a Muslim when entering the world of journalism as a Muslim.

The biggest reason Muslims are hated in the eyes of the United States public is because of their ignorance which led them to learn the fear of Islam.  The best and most effective way to counter “Islamophobia” is by educating the public about the true essence of Islam.  It is the journalist’s job to be objective and tell the facts.  Educating the world about Islam and its followers will result in the world beginning to view the religion in a new light.

Islam teaches its followers to respect all religions and that should be included in some coverage.  Other coverage could detail stories of the Prophet Muhammed (s) and how he once passed a Bible on the ground and how he stopped to pick it up, teaching his companions that we should respect “their” book.  He respected the book and the people who follow it.  Islam also preaches being nice to your neighbors.  Why not find a story of a Christian family having nothing but good things to say about a neighboring Muslim household whom they have lived next to for 20 years? 

Little things can change the way the public views Islam, but as a Muslim journalist, my first job is to educate the public about Islam in direct and indirect ways.  One can counter ignorance by educating.  One can counter stereotypes by disproving them and showing they are not true.  We can counter “Islamophobia” by showing the public there is nothing to fear besides the biases of one nation.

Finally, I have not chosen journalism.  Journalism has chosen me.  I feel that I have been chosen to make a difference in this world and I will rise to the occasion.  I will use my skill in writing and my outspoken ways to serve Islam as journalist.  I ask the Almighty to grant me success in doing so.

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