Muslims make up 25 percent of the world’s population and with 450 000 Muslim millionaires in the Middle East, Islamic investment options are becoming increasingly important on the world stage.
In Britain alone, Muslims contribute £31 billion a year to the economy and there are now 10 000 British Muslim millionaires, according to the Ethical Media Group.
London Central Portfolio (LCP) – an asset manager with around half a billion pounds worth of residential property under management – has noted a growing demand for Sharia compliant funds among Muslim consumers in the UK and abroad. To meet this demand LCP has launched the first ever Sharia compliant residential property fund in the UK, London Central Apartments Ltd (LCA), and recently completed the first close.
LCA is now making its first acquisitions, investing in one and two bedroom properties offering the greatest performance potential in areas like Mayfair, Knightsbridge, Kensington and Chelsea.
“LCA will find the best deals, add value through renovation and let to blue chip tenants, targeting an IRR (annual return) of 10-13 percent a year after a five year hold,” says Naomi Heaton, chief executive of LCP.
LCA is eligible for direct investment, conventional self-invested personal pensions (SIPPs), small self-administered schemes (SSAS) and individual savings accounts (ISAs). It is also approved for inclusion in Pointon York’s Sharia compliant SIPPs which have been accredited by Islamic Bank of Britain, the UK’s only wholly Sharia compliant retail bank.
“LCP is providing access to an attractive asset class while ensuring the fund remains within the bounds of Sharia statute. As a bricks and mortar product, often preferred by Muslim investors, the LCA fund is a perfect recipe for us. The projected returns are excellent and LCP provides a strong track record, so many of our clients are investing in this proposition,” says Faizal Karbani, chief executive of financial advisory firm, Simply Sharia.
LCP’s Sharia compliant UK residential property fund represents a pioneering step forward for the Islamic wealth management sector, which is still in its infancy despite its rapid growth from $1.45 billion to $1.3 trillion since 2002. Figures from The Banker magazine found that in December 2011 the Islamic fund industry comprised just 765 global Islamic mutual funds, compared with some 60 000 in the conventional finance sector.
“There is a growing perception of the importance of Prime London Central (PLC) as a long term, safe haven asset class. PLC has shown consistent price growth of over 8 percent a year for the last four decades and was a robust performer even during the credit crunch, when other investments struggled. For Muslims looking at their investment options in the face of a volatile equity market, LCP’s new fund provides an alternative solution,” says Heaton.
However, as Hugh Best, head of investment at LCP points out, LCA is open to all investors.
“With the recent Libor scandal creating further turmoil in the banking industry, LCP’s third Sharia compliant residential fund should not only be viewed as an option for Muslims. Being asset-based and asset-backed, it is an inclusive option for any investor seeking good market returns through ethical and socially responsible ventures,” he says.
LCA is still open for investment before its final close by qualifying investors and through independent financial advisors and wealth managers. Visit www.lcpfund.com.