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Bahrain based IIB has stake in Business Bay, Dubai
- November 30, 2005, 9:06 am
International Investment Bank B.S.C. (IIB), a Bahrain-based Islamic investment bank, is taking a 50% equity stake in a US$ 80 million investment in a high-end office tower to be constructed in the rapidly developing Business Bay district in Dubai.
IIB is in the process of placing a portion of this investment with investors in GCC countries, and it has already received a very positive response.
IIB’s acting Chief Executive Officer, Aabed Al Zeera, commented that ‘this transaction reflects the Bank’s strategy of offering its investors a range of Shari’ah compliant investments that are diversified by asset class and by location.’
‘Our existing investment portfolio includes the Bahrain Property Fund and the Housing Development Company, both in Bahrain, equity investments in an independent power producer in Asia and an Islamic investment bank in Europe, and the US$280 million acquisition of a landmark office building in UK with a strategic partner. Our current pipeline of transactions includes several private equity and real estate investments in the GCC and Europe, which we are aiming to finalise and offer to our investors during late 2005 and early 2006,’ added Mr. Al Zeera.
The office real estate market segment in Dubai offers an attractive growth potential driven by the spectacular growth in other sectors. The co-sponsor of the new office tower project, the Al Masa Group, a Dubai-based multi-faceted organization engaging in synergistic activities in IT and real estate across three continents, with an aggregate turnover of almost half a billion dollars.
The Group has specialized in trading in computer hardware and software, information systems, telecommunication, electronic equipment, property and gold. It has experienced continuous growth, and recently increased its involvement in real estate development.
IIB’s Chief Operating Officer, Salah Nooruddin, explained that whilst the investment offers an attractive Internal Rate of Return (’IRR’) above 25% p.a., there is scope for these returns to be significantly enhanced through capital appreciation at exit. He added that ‘IIB will play an active role in supporting the sponsor in ensuring that the implementation of the project is carried out according to the envisaged schedule.’
Mohamed Hadi Mejai, Director of Investment and Business Development pointed out that IIB is adopting a selective approach in its involvement in real estate. The Bank targets market segments where there is still growth, and assets that are income-generating to ensure liquidity for its investors. The Bank’s view is that the office market in Dubai still offers good prospects.
‘Our intention is to continue our selective approach towards real estate and we will be pro-active in building our portfolio in other sectors such as manufacturing, healthcare, telecom, services, infrastructure and utilities,’ commented Mr. Mejai.
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