With real estate opportunities shrinking in established markets and purchase costs going stratospheric, a shift toward less pricey prospects has already developed among investors seeking Shariah compliant assets with long-term capital appreciation potential.
Although most Shariah property investments are made via direct purchases, making it tough to get a clear view of the buying trend, the performance of public Islamic real estate funds do provide an indicator of underlying patterns.
Browsing the IFN Investor Funds Database, a quick overview shows stagnant AuM growth among funds focused on the American and European regions – which used to be the destinations of choice for Muslim investment monies. Growth also seems to be peaking in the GCC region – while the single-digit steadiness of funds in Asia is starting to show signs of perking up.
This trend seems to be fueled by the rise of wealthy new families in the Asian region, Head of Real Estate Funds at Rasmala Investment Bank Ruggiero Lomonaco told IFN Investor – and he is now exploring prospects beyond the GCC to further grow the firm’s reach in the Shariah investments space.
“We have some Islamic clients who bought into US firms, which then reinvested the money with data centers in Malaysia. Why should clients have to go in such a roundabout way to acquire assets and pay higher fees when I can help them invest directly?”
Noticing more of such investment redirects in recent months, Ruggiero said he would be presenting prospects that he had identified in Malaysia to Rasmala clients and is prepared to expand this outreach further across Asia where potential growth in returns would be likely to take off.
Among the countries with significant Muslim populations and with rising wealth accumulation are Indonesia and Bangladesh, together with pockets in India, Taiwan and Thailand. Ruggiero said these clients are ready to consider alternatives closer to home rather than venture into already saturated markets.
Focusing mainly on real estate investments, the Rasmala strategy leans more toward residential, commercial and hospitality assets – where there is a regular income stream from both leases and operations, rather than a pure capital gains play.
Expanding the firm’s coverage to Asia is a natural expansion of the firm, which had already given emphasis to the GCC region in recent years and pivoting away from its former mainstay of investing in mainly European and US properties.
Touching on the recent global economic uncertainty, Ruggiero said it is better as an investment firm to focus on its current expertise and strengths to preserve client wealth in stable, tangible assets like real estate – rather than taking on more volatile prospects.
“Clients value us more in knowing how we avoided them incurring losses, not just in getting good returns.”
