Author Archives: Charlotte Dennison

Press Release – 90 North completes fourth warehouse exit delivering superior risk-adjusted returns to investors

90 North completes fourth warehouse exit delivering superior risk-adjusted returns to investors

90 North Real Estate Partners LLP (”90 North”), headquartered in London, has completed the sale of a Volkswagen logistics centre in Germany for €52M.

The sale follows three previous exits in Norway and UK with properties let to L’Oréal, Siemens PLC (both in UK), and Onninen (Norway) – a total of approximately €145M.

Nick Judd, Founder Partner and Head of Investment at 90 North, which advised on the properties over their investment period commented:

“Following the VW exit the weighted average IRR delivered to Limited Partners on the completed sale of these four warehouse investments is approximately 14.5% (13.4% post-performance promote) including very attractive quarterly income distributions. Naturally we are delighted with the very profitable outcome of these investments which demonstrates the quality of our advice and asset selection”.

90 North is constantly appraising new warehouse investments across the geographic spectrum, mindful of the pitfalls of this very diverse and fast moving investment sector.

In the Media – Property Week – And so it begins: outlook on the investment year ahead

This is the period during which we typically source and execute all transactions with our partners whether in UK, Europe or USA for the investment year running from September to June. Consequently, it seems like a good moment to pause and reflect on market conditions and likely investor outlook.

For some, the summer can be a ‘quiet’ period – but not for 90 North have concluded many deals including the recent sale of the Rudolph Logistics depot in Volksmarsen in Germany for €52m as well as other properties in Norway and UK.

Looking forward to the year ahead, the global ‘hunt for yield’ – or more particularly the ‘hunt for security and yield’ – continues to drive our markets.

This is due to ongoing uncertainty (and fear) caused by a whole range of geopolitical issues.

These include worries over North Korea, conflicts in the Middle East, a fractious political climate, freak weather incidents and, of course, stubbornly low oil prices and the unwinding of quantitative easing which are both making investors nervous. Global debt remains a huge concern too.

As at the end of June 2017, the amount of investment in negative-yielding sovereign debt stood at $9.5trn – down on a year ago, but still an enormous figure.

The consequence of these factors, plus high transactional costs at the purchase and exit of an asset, has led to many investors, quite rightly, holding onto high quality assets, unless purchase offers are compelling.

This has led to a reduction of quality stock, particularly in the UK. With demand for income producing property assets as strong as ever, the result has been higher prices and falling cap rates/yields, even for some secondary assets. This trend is particularly evident in London, although regional pricing is also materially tighter than last year.

We at 90 North remain cautious and, as material co-investors in all our projects, particularly focused on the fundamentals. But I must say, by contrast I am regularly shocked at some key participants’ (both investors and asset managers) weak market and property knowledge – particularly in regards to how various market sectors are evolving and how operational/business dynamics are impacting, and will continue to impact, on values.

So let the year begin – but our underlying approach (and the basis on which we present new transactions to our partners) will continue to be very meticulous and focused on fundamentals – even at a time when other market participants are potentially throwing caution to the wind.

Press Release – CoStar – 90 North Real Estate buys Exeter student homes scheme

90 North Real Estate has bought Exeter One, a student housing scheme next to the University of Exeter, from Chesterman Consultants for £18,575,000.

The freehold 219-bedroom purpose built student accommodation asset has sold at a price reflecting a circa 5.9% net initial yield and a value of £84,800 per student bedroom.

The building was constructed in 2010 and refurbished in 2013. The property is on the western boundary of The University of Exeter’s Streatham campus, just 300 yards from the University’s main entrance. Exeter City Centre is located 2.1 km (1.3 miles) to the south and connected by a regular direct bus route. Exeter One comprises 112 en-suite bedrooms, arranged in cluster flats, and 107 studio bedrooms offering a number of separate price points for students. The scheme has historically been 100% let with consistent year on year rental growth and is 100% let for the 2017/18 academic year.

John Yeend, Partner at 90 North, said: “We are delighted to have acquired this core student housing investment which will deliver excellent returns for our clients. UK student housing continues to offer a sound fundamental combination of strong unfulfilled occupier demand and limited supply, delivering inflation-tracking annual growth. This acquisition is the first in an ambitious programme of investments 90 North will be making in the student housing sector.”

Rachel Pengilley, Partner, Knight Frank Student Property, said: “The transaction demonstrates a continuing demand for the UK PBSA (purpose built student accommodation), particularly for assets that can demonstrate a strong track record of high occupancy and rental growth in key Russell Group University cities. Exeter has experienced strong lettings for the 2017/18 academic year with the majority of private sector schemes now fully let.”

Knight Frank Student Property advised Chesterman.

Podcast – Islamic Finance News – Buoyant Australian real estate market attracting Islamic investments from the Middle East

Malaysia may be one of the biggest investors responsible for channeling Shariah dollars into the Australian market, but the buoyant real estate sector Down Under is now also capturing Islamic investment flows from beyond the Asia Pacific region.

“The initial Shariah money came from Malaysia which has been [one of] the top five investors in the Australian market and this started the process of understanding Shariah financing in Australia and groups being interested in participating in providing capital on that basis,” explains Michael Dowling, a partner and the head of Australia for 90 North Group, a Shariah real estate specialist, to IFN.

While Malaysian Shariah investments into the Australian property markets continues to be strong — Lembaga Tabung Haji, the country’s Hajj pilgrims fund, this year allocated RM2 billion (US$476.82 million) to invest in real estate in Australia and the UK over the next three years — investors from the GCC are also making their way Down Under.

“In the last six months, we’ve seen a significant interest from the Middle East — Saudi Arabia and Dubai in particular — considering capital on a Shariah basis,” Dowling confirms. “We are very hopeful of the Middle East market and we think the market will continue to grow dramatically in terms of providing Shariah capital to Australia.”

The appeal of the Australian property market is unsurprising. Australia, the only economy in the world which has not had a technical recession over the last 26 years, has strong economic fundamentals which have anchored its real estate segment in solid foundations bolstered by generous tax breaks for landlords and a robust legal infrastructure.

“Australia tends to work within very safe parameters when commercial development is undertaken and that is driven by the banking sector so it is not really possible to build speculative projects in Australia — you can’t build something unless it is already pre-leased otherwise you won’t be able to get financing,” shares Dowling. Similar constraints also apply to the residential sector.

Viewpoint – Making hay while the sun shines

Our own 90 North was delighted to be a sponsor of IFN Europe Forum in London on the 11th and 12th September. Its timing could not have been better for Islamic real estate, on which as
you would imagine we focused our attention.

With the US having had its long Labor Day weekend, UK children all back to school, Continental Europe back up and running after the summer break and Australia never seeming to slow down, the fl ow of real estate investment opportunities is certainly back up and running.

This supply is being matched by healthy demand among Islamic investors, with many delegates at the forum keen to deploy capital before the end of the year. After one of the wettest summers in recent memory in the UK, and with brighter prospects for better weather, the proverb “Making hay while the sun shines” seems appropriate and hopefully captured some of the enthusiasm at the forum.

This is all great news for the Islamic real estate industry, yet again reminding us of the fundamentals of property that frequently make it a go-to destination for Islamic capital despite global uncertainties.

Presumably not by coincidence, TheCityUK which promotes London’s activities, chose the IFN Europe Forum to announce that the results of their own research had confirmed the UK as the leading western center for Islamic finance, adding that: “Given the UK’s position as a world leader in innovation and development within the sector, we’re well placed to capture this opportunity.”

Having questioned in my previous article whether we were seeing any innovation in Islamic real estate, I had the pleasure of hosting a panel at the IFN Europe Forum on the advances of crowdfunding and fintech within Islamic real estate. Again, the passion could be seen among the panelists, with genuine delight that they were based in London and able to tap into the network of innovative professionals looking to make a difference.

As we head rapidly toward the fourth quarter, I am very confident of being able to report on bundles of hay that have been produced by the end of the year. Good luck to all!

Original article in Islamic Finance News.

Press Release – CoStar – 90 North sells Volkswagen logistic centre in Germany

90 North Real Estate Partners has sold its VW logistics centre in Germany, for €52m to Israeli fund manager MiDeal Group, CoStar News can reveal.

The 972,000 sq ft spare parts logistics property, located in Volkmarsen, near Kassel, is one of Germany’s key automotive hubs and is leased to and operated by Rudolph Automotive Logistik, a long-standing logistics partner of the Volkswagen Group.

The sale is 90 North’s third this year and second in continental Europe.

Lisa Amin, senior investment manager of 90 North who advised the seller, Becker Property Investment Company, on the sale said: “We are pleased with the profitable outcome of this investment which demonstrates the quality of our advice and asset selection.

“We will continue to focus on maximizing the value of the current investment portfolio and on introducing new investment opportunities to our investors. In particular, 90 North will continue to pursue opportunities in Germany and elsewhere in Continental Europe.”

Nick Judd, Founder and Head of investment at 90 North, said: “The sale of the Rudolph property follows a period of very attractive income returns from the property. In the current investment climate, where the global ‘hunt for yield’ continues and there is a limited supply of high quality assets, we were naturally reluctant to recommend a sale. However, the sale price achieved was very attractive.

This is the third exit 90 North has achieved in 2017 following the recent exits of the Siemens gas turbine HQ in Lincoln, UK and Onninen logistics property in Oslo, Norway. In total, we have now concluded €135,000,000 of profitable exits in addition to recent acquisitions since the beginning of 2017”.

Raviv Koren, managing partner at MiDeal Group said: “This acquisition fits with MiDeal Fund’s strategy to purchase German income producing properties in good locations with strong tenants. Such acquisitions enable MiDeal Fund to distribute an attractive annual fixed income cash flow to its investors”.

Arzan Wealth acted as Strategic Advisers to Becker Property Investment Company Limited. Jones Lang LaSalle acted as sell-side advisor and Simmons & Simmons acted as legal advisors to the Seller.



In the Media – Globe St – Buyers and Sellers Get Ready for Super Tuesday

CHICAGO—Certain days of the year are more important than others on the business calendar. April 15, of course, is known to all, along with the last day of the fiscal year. Less known, and quite unofficial, is the day after Labor Day, or as some in commercial real estate now call it, Super Tuesday. After a slow summer taken up by vacations, it’s increasingly the day that owners eager to sell their properties by the end of the year bring them to market. And investors can finally start to finalize their own plans as they evaluate the offerings.

“Summers are not a productive time to put properties up for sale,” Daniel Cooper, the Chicago-based head of 90 North’s North American operations, tells And that’s true for many regions across the globe, a key consideration for international investors. Ramadan, for example, the Muslim month of fasting, has begun in the summer for most of the past decade. Europeans typically take long vacations during the summer, and in many parts of Asia, summer is also a time for holidays.

But once summer ends, and only a few months remain in the year, Cooper adds, “how do you reach you goals on transaction volume?” The answer for many is Super Tuesday. “It’s a time to do business.”

And he expects the last few months of this year to be especially productive. “We’ve recently had a lot of uncertainty, starting with Brexit,” he says. That feeling was compounded by last November’s election and worries over whether US trade agreements would remain in place, along with other concerns over immigration and political turmoil.

And Cooper also says a lot of owners believe the market is quite mature, making this a good time to sell. Furthermore, a lot of capital is looking to buy in order to lock in good returns for the long term.

90 North has already had an active 2017. Earlier this year it advised investment partners Sidra Capital and KAMCO Investment Co. on several large-scale transactions in OH. The first acquisition was a 215,000 square foot class A office building in Easton, a Columbus suburb, that Abbott Nutrition Products uses as its headquarters. The second transaction was the $84.5 million acquisition of the 368,447 square foot corporate headquarters for Mercy Health in suburban Cincinnati. The newly-developed, five-story office building is located approximately 10 miles from downtown in the city’s Bond Hill neighborhood.

90 North also has big plans for the rest of the year, Cooper says. It’s poking around several other CBDs, and may complete around three or four additional deals. “I can see us investing up to half a billion dollars before the year’s end.”


In the Media – UK Islamic Finance News – 90 North: In its own words

Philip Churchill is the co-founder and managing partner of 90 North Real Estate Partners. In this contribution, he offers unique insights into the UK and global property market from an expert perspective: outlining current opportunities and looking ahead to what we can expect in the coming years.

What is 90 North?

We are a global real estate investment partnership specialising in Islamic finance and the acquisition of Shariah compliant assets. Myself and Nick Judd founded the firm back in 2011 after lengthy careers in finance and real estate: we were convinced there was a niche in the investment sphere waiting to be filled by an investment manager that both was completely independent (and so able to provide unbiased advice) and possessed the unique technical skillset Nick, I and the rest of the partners enjoy.

Our motto is ‘Doing great business with a good conscience’ – a philosophy which strikes to the heart of the firm. We are determined to deliver outstanding results for our clients, while remaining conscious of an ethical code that helps guide our business transactions and strengthens our business relationships.

It’s a combination that’s certainly paid off. Since the firm’s founding six years ago, 90 North has completed transactions on a range of assets across the globe – from a Grade A office in Cincinnati to a logistical facility in Oslo – worth a total of nearly US$1.7 billion (£1.32 billion).

What are the advantages of investing in commercial real estate over, say, bonds or gilts?

Commercial property offers a mix of solid returns and stability that other asset classes struggle to match. While acquiring such property is still something of an art requiring careful judgement and deep sector expertise (which, I’m pleased to say, 90 North possesses in abundance), once properly selected, they can generate yields which are far more resistant to political – and, to a degree, economic – shocks than bonds or gilts. Equally, this profitability is not a flash in the pan: fundamentally, businesses will need offices and warehouses for the foreseeable future, so there is a security of demand present too.

In addition, I have found many investors appreciate the tangible aspect of commercial property. They like being able to see an asset, find out what it does and watch it develop; you simply cannot get this with gold or gilts.

Do you think the volatile global climate is leading investors to prioritise safety over yield (and why/why not)?

Yes. There remains a hunt for yield, but, overall, we find investors are looking for safety and are willing to accept lower yields to achieve this.

A Brexit that remains unclear and a Trump presidency that remains volatile mean many are doubling down on dependable investments and delaying any risky moves until the global picture becomes steadier.

The investment partners we work with from the Middle East are still active in the real estate sector. According to research from Savills, MENA region investment now stands at £1.93 billion – up 25% on last year. However, there is still understandable nervousness around, for instance, the weakness of the pound, the status of London’s financial hub post-Brexit and the impact of the travel ban in the States. As a result, they are seeking extra security like long leases and local economic strength. The General Electric headquarters building in Ohio, which we acquired late last year for US$107 million (£83.1 million), is a great example of this attitude, since we acquired the building with a 15-year lease in one of the US’s strongest states economically.

90 North has a global spread of assets across the UK, Europe and the US – are there any regions you are particularly interested in targeting over the next half year/ year?

We’ve had a great start to the year, including two significant acquisitions in the States, the refinancing of two UK properties and the exit from one of our Norwegian properties, realising solid returns.

Going forward, we’ve just opened a new office in Australia, so we’re looking forward to taking advantage of the opportunities the country presents. I had thought the national market was dominated by local pension funds and that the economy would be overly vulnerable to falling commodity prices. However, the reality is very different: Australia’s economic outlook is healthy and there are plenty of opportunities to invest beyond the resource sector. Interestingly, there is also a strong understanding of Islamic finance in the country, giving me confidence that it’s a place where we can strike up great partnerships and attract talented staff.

What’s the big picture? Where do you see 90 North in 10 years?

Our firm has gone from strength to strength over the years and we’re now recognised globally as the leading Islamic finance investment advisor in the real estate sector – there’re very few firms out there that can do what we do.

I want to take this unique expertise 90 North possesses and use it to drive ever-larger and more challenging transactions, as we grow the global recognition of our distinctive brand. We have a fantastic footprint across the UK, Europe and the US and I am aiming to have this replicated in Australia and Southeast Asia in the next few years.At the same time, I don’t foresee us becoming an impersonal conglomerate. We’re something of a family at 90 North and that should stay, both for the benefit of our employees and so that we can continue to deliver on our philosophy of doing great business with a good conscience.

In the Media – UK Islamic Finance News – Real Estate Roundtable: A positive outlook for UK property

Gathering market leaders and industry experts together for a frank and open exchange, the UK Islamic Finance roundtable is designed to provide invaluable insights into the most important issues affecting the UK market. For our inaugural issue, what better platform to start from than a look at the property investment market – one of the UK’s most valuable assets in attracting inward investment and a key driver in the development of Shariah compliant structures and fundraising channels.

Philip Churchill, founder and managing partner, 90 North
Tracey Folkes, co-founder and director, Broadoak Real Estate Finance
Naomi Heaton, founder and CEO, London Central Portfolio
Sarah Gooden, partner, Trowers & Hamlins
Michael Dey, real estate division, Gatehouse Bank

How is the market currently performing – and how is 2017 looking compared to previous years?

Philip: The UK real estate market is still determining what Brexit means and what impact it could have in terms of the economy and interest rates, both of which have an inevitable impact on property values. You only have to read the papers to see there’s a broad and variable spectrum of opinion out there. The uncertainty is encouraging some landlords to hold onto their properties, but there is still plenty being traded.

Michael: Geopolitics, Brexit and the according impact on the UK economy have proved for some interesting dynamics. The occupational market seems to be broadly performing sideways at best with investment yields and/or exchange rates providing a good investment opportunity for some investors. Overall investment activity is expected to be of a similar tone to 2016 and less than 2015. This has proven for some attractive risk-adjusted opportunities from a debt perspective.

Naomi: The demand for Shariah compliant investment solutions in UK real estate has grown significantly since the launch of the government’s sovereign Sukuk three years ago, which invested in commercial property. With no plans from the UK government to launch another Islamic product, Shariah-conscious investors have been making a clear call for new real estate solutions as they look at ways of diversifying their portfolios. This is increasingly the case as the pound remains weak against other currencies, especially for dollar-denominated investors.

Sarah: The main problem that potential purchasers are having is a shortage of properties to buy. We understand anecdotally that many properties that are changing hands are being sold off-market and accessing opportunities to buy can be challenging. This is a problem that has been affecting the market for at least the last couple of years. Brexit has not, so far, had the negative impact that was initially feared and the UK still appears to be attractive to overseas investors.

Where is the money coming from, and where is it going to?

Philip: From an Islamic finance perspective, the countries of the GCC are all still very active. However, the region’s opinion on Brexit is split, especially regarding currency, with almost no one sitting on the fence. Many see sterling weak against the US dollar and are very keen to buy, while others who perceive uncertainty and volatility are staying away.

Tracey: In 2016, overseas investors accounted for 43% of the total volume of completed transactions and interest from overseas continued in 2017. The focus has moved away from just London with the assets located in the regions now being of firm interest. Deal sizes tend to be larger at £25 million-plus, although smaller deals in the right location with strong covenants will be considered. All asset classes [are] considered with [the] most popular being office, retail and student housing.

Sarah: The majority of interest comes from the Middle East and Malaysia for obvious reasons. Additionally, we are aware that investors from other parts of the world, particularly China, Korea and Taiwan, have been active in the market. Interestingly, we are also seeing Chinese banks increasingly becoming involved in the real estate finance market. In terms of investor preference, many of our Middle East-based clients are focusing on the regions rather than London where some view the market as overpriced. Malaysian institutions still appear to be more focused on London and more comfortable with that market.

Where are the hotspots for UK Islamic investment into real estate, and what recommendations do you have for overseas investors?

Philip: Central London remains a hotspot. For those who see value in sterling, yields on core office properties not exposed to the potential impact of Brexit on the City are stable, but very low. However, for Islamic investors looking for better returns, I’d recommend they take a broader look across the property sector and the UK. The opportunities are out there if investors look hard enough.

Michael: Real estate debt currently provides for good risk-adjusted returns in an uncertain market.

Naomi: As many more people in the UK elect to rent, rather than buy, the Private Rented Sector (PRS) has become of increasing interest. Build to Rent is currently a hot topic and UK Islamic finance providers such as Gatehouse Bank have been investing [in] the sector. However, while the volume potential appeals particularly to institutional investors, Build to Rent is an untried concept taking significant development risk, targeting an untested domestic market. It could take a generation to become established. [However], overseas investors should also take advantage of residential real estate funds which now offer significant tax advantages over direct investment as well the benefits of diversification, buying power and professional management.

Sarah: There is a continuing appetite among Shariah compliant investors for office accommodation, logistics warehouses and light industrial properties. There is generally less interest from this type of investor in retail properties such as shopping centres and supermarkets because of additional Shariah compliance issues that can arise from the sale of certain types of goods and services (eg alcohol, pork products) but we do still see clients investing in properties occupied by retail tenants with a strong covenant. Build to Rent is a sector attracting increasing interest and activity and student accommodation has fallen out of favour.

What duration are investors seeking, and what returns can they expect?

Philip: Most investors still have an initial business plan horizon of three to five years, but that is not to say that such business plans won’t be extended in due course.

Michael: Generally 4-7% unlevered returns for direct property investments over a period of 4-7 years.

Tracy: Loan terms range from three to five years with average weighted lease lengths tending to be eight-10 years plus. Double-digit IRR with cash on cash returns in excess of 8% have been achieved.

Sarah: Typically four to five years but some investors such as Malaysian institutions are investing more for the long term.

Naomi: Our listed closed-end funds typically have a five to eight-year investment cycle. However, Middle Eastern investors in particular have been making increasing calls for regular distributions in the current low interest rate environment. To meet this demand, our next fund, planned to launch later this year, will look to offer annual returns of 5% together with a capital return on exit.

What are the most popular structures used, and are these fit for purpose?

Sarah: Financing structures are still dominated by Tawarruq/Murabahah, particularly for the Malaysian investors and their Malaysian-friendly banks who can generally provide Shariah compliant finance on this basis. Middle East investors generally obtain finance from UK-based banks. There is very limited availability of Shariah compliant bank finance, which does not tend to be available on competitive terms.

As a result, we generally utilize structures designed to accommodate conventional interest-based debt while preserving Shariah compliance for the investors. This normally involves borrowing by orphan companies which also receive funding from the investors via a Shariah compliant financing instrument.

There are a number of funds which require Ijarah (eg EXIM Bank of Malaysia’s Sukuk funds must be placed in Ijarah structures). This can be difficult in the UK market. Islamic banks seem to be comfortable using Ijarah for home finance but less so for commercial property where the values are much higher and VAT treatment in particular can cause difficulties.

Are we seeing any innovation in terms of financial structures and if not, why not?

Philip: Honestly, within the UK I’m not seeing any innovation in financial structures. There is no need as what we have works and where investors – as most do – wish to have senior finance on the properties as well, the banks won’t entertain anything that doesn’t look familiar.

Michael: In the context of capital cost, it is arguable that not all UK banks are on a level-playing field (challenger banks versus more established banks). This is further exacerbated when compared to European banks. This is an issue which needs addressing to provide for a more competitive landscape.

Naomi: Cost is a factor that needs to be looked at. Shariah finance is often uncompetitive with conventional finance costs. This can be off-putting to both potential investors and institutions operating in the space, looking for equivalent returns. In addition, Shariah audits, for example, are extremely expensive and often not perceived to offer value for money.

Are there any challenges to investing in the UK from a regulatory angle?

Naomi: The main issues with regard to UK real estate investment are tax-related, rather than regulatory. In an effort to increase tax revenues, stamp out unscrupulous landlords and free up homes for domestic buyers, the last five years have seen successive increases in residential taxes. These have been particularly targeted at foreign buyers and the luxury end of the market and have led transactions to fall to an all-time low. To address this fiscal drag, the UK government needs to renew buyer confidence by affirming the status quo for current tax legislation. Buyers can then structure their investments appropriately, assimilate the extra buy-in costs and re-enter the market with confidence. This will have the added benefit of supporting economic growth during Brexit while demonstrating that the UK really is open for global business.

Tracey: Lenders are regulated differently depending on sector (clearing bank, life company, debt fund, etc), which can impact on the terms they can offer.

How does the Islamic real estate market relate to/tie in with other sectors and markets in the UK? Where could relationships be developed or improved ?

Philip: I’m still keen to see more progress in the Takaful market to allow commercial properties in the UK to be insured in a Shariah compliant manner. There is a huge opportunity there.

Michael: Education has improved regarding Islamic finance and mainstream investors are more open to it.

Naomi: The Islamic real estate market is still small and needs further support to actively encourage new players into the space. Setting up a UK Islamic Finance Federation, for example, would help bring together relevant professionals, equity investors and finance providers, exploring different Islamic solutions and driving growth in the market. It could also assist conventional businesses, often with very limited understanding of how to start structuring Shariah products.

Sarah: Real estate is still the most popular asset for Islamic funds. If funds were able to consider longer tenures (perhaps Malaysia rather than GCC investors?) they may be able to target infrastructure deals? [However], UK Islamic banks are not playing a significant role in the market. There is insufficient liquidity and pricing is not generally competitive with conventional finance.

What is your outlook for 2017-18 and beyond?

Michael: We are generally mindful of the political environment but nonetheless good risk-adjusted opportunities do exist as a result.

Naomi: Despite Brexit uncertainty and uncomfortable tax changes, the entry-level sector which rental investors prefer has remained resilient. We expect this price growth to increase significantly as low finance costs, [a] weak sterling and an attractively priced market encourage buyers back in. London will remain a big draw for Islamic investors seeking safe havens. The luxury and new build sectors, on the other hand, may remain sluggish given the greater buy-in costs and the new non-dom IHT. Bad publicity for these sectors has already turned many Shariah-conscious investors away from their traditional luxury stomping ground towards the more cost effective and higher yielding investment sector of the market. In terms of tips for investment, go for small flats in unique heritage buildings in Prime Central London. These are in limited supply with potential to add value and provide long-term capital growth. Small units are also the most popular as tenants typically have budget ceilings, generating the highest returns.

Tracey: There is a potential shortage of investment stock to satisfy investor demand; all in cost of funds expected to remain low for the next 12-24 months; plus unknowns due to Brexit and political uncertainty.

Philip: The hunt for yield continues and everyone wants as much certainty as they can get so as to bridge any volatility as Brexit continues along its path. My forecast is that the best assets that provide these attributes will maintain or increase in value, while poorer assets will suffer. The fundamental attractions of the UK for Islamic real estate investors remain: namely, a stable legal system, clear land ownership, familiarity with the country and a critical mass of Islamic finance professionals. These are not going to fall away.

Viewpoint – Innovation in Islamic real estate investment: Is there any?

I was recently asked in a Q&A session what innovations there are in the Islamic real estate investment world at the moment and I confess that I had to admit that I wasn’t aware of any.

The global financial crisis started 10 years ago this summer, and as you will recall, took two years to largely work itself out. It’s a bold statement, but innovation was not welcomed in the financial world that recovered from this shock.

Investors, banks, regulators and perhaps even the professional advisors themselves wanted something they understood and something relatively boring. Boring was and largely remains good.

I was part of the teams that 15 years ago or so did the first Shariah compliant levered real estate acquisitions in Scotland, Sweden and Switzerland…it seems that the S countries had been previously neglected! We were working with local tax, legal and banking professionals and sometimes the regulators as well to take our previous knowledge and see how it could be applied. Now that the basic structures are understood for most countries, the level of innovation is frankly considerably less. As a real estate investment manager, our own 90 North likes to think that we innovate in some way, but making the real big differences are behind us, or at least for the moment.

However, if you dig deeper you can find some hope of excitement. The UK is known for its fintech and so I’m delighted to see that Yielders has established itself as the first Shariah compliant equity crowdfunding platform in the UK.

Regulated by the Financial Conduct Authority is a great credential and while the underlying real estate is giving investors what they want, such as a simple investment without undue financial engineering, their route to raising the equity is something new. It would be great to see this initiative grow from strength to strength.

I hope that with the passage of time there will be room for major innovation again in the future and for the meantime we should applaud those working to make a difference.

Original article appeared in Islamic Finance News.