JEDDAH, 20 November 2007 — An open-ended Shariah complaint AlAhli Global Real Estate Fund, described as the world’s first, was introduced by NCB Capital here yesterday.

The fund seeks to generate long-term capital appreciation and invest in companies engaged principally in the real estate industry the world over.

“In addition to investing in publicly-traded real estate development and management companies, the fund will also invest in globally listed real estate investment trusts (REITS),” Sami R. Abdo, managing director, NCB Capital Investment Services, told Arab News at the launch of the fund at the Jeddah Hilton yesterday.

Subscriptions to the fund, which is targeting a size ranging from $250 to $300 million at the start, is open till Dec. 31. “It’s an open-ended fund and, depending on the response, the size of the fund could be expanded,” Abdo said. “The fund will be initially focusing on Asia and Asian Pacific,” he said.

Rather than directly owning properties by the individual investor that can be costly and difficult to convert into cash when needed, investors can invest in listed companies that own and manage a pool of real estate properties. And at the same time, the investment could be liquid and converted into cash easily. “Our main target will be publicly-traded real estate companies and REITS,” he emphasized.

The Alahli fund will invest in a global market that is currently estimated at $1.5 trillion, which means a 370 percent growth over the past 10 years. Between 2006 and 2007 the market doubled in size due mainly to major growth in the Asia-Pacific, Abdo said. “Within this large market, the Fund trades in the stocks of the most prominent publicly listed companies around the globe whose activities are Shariah-compliant and related to the real estate business including rental, maintenance, management and development of offices, hospitals, shopping malls, stores, restaurants and hotels.

The launch of this fund 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, he said.

With a minimum subscription of $2,000, the new fund provides investors with an easy and convenient opportunity to participate in the rich rewards that real estate can offer by investing in the shares of real estate companies, rather than becoming involved in the costly and time consuming process of directly buying properties. “The advantage in this approach is that the fund offers more liquidity to the investor than real estate property,” Abdo said.

“By introducing the fund, NCB Capital, the investment and asset management arm of the National Commercial Bank, is offering more by bringing a new alternative asset class to the Saudi market, a concept known as REITs,” Abdo added.

REITs have high liquidity and offer higher than average returns.

with lower volatility. Companies listed as REITs do not get taxed at the corporate level on their income because at least 90 percent of their profits are paid out to shareholders, offering higher returns, he added.

“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,” said Ayman Bajsair, head of product development group 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,” Bajsair said.

Referring to the advantages of this “innovative” fund, he said: “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 GREF makes it so easy for investors to get into this important new asset class without any delay. Overall, the fund provides high liquidity with the diversification and income of commercial real estate,” he added.