TAILIEUCHUNG - Understanding Shariah Investment

The development of the LPT market is slower compared to overseas REITs. For example, while Malaysia launched its first LPT in 1989, REITs in Japan (introduced in 2000) now amount to 12 listed JREITs with approximately US$11 billion market capitalization (European Public Real Estate Association, 2004). Investors rationalize that small market capitalization, coupled with stringent gearing limit prevent LPTs from acquiring more lucrative prime properties and most investors feel that market capitalization of at least RM500 million per fund is more suitable in the Malaysian context. Some empirical evidence shows that. | RREEF Real Estate Research June 2008 Understanding Shariah Investment Table of contents Understanding Shariah Scale and Sources of Middle Eastern Capital .10 Capital Mobility and The Outlook for Shariah- Compliant Alternative Authors Henry Chin 44 207 545 6611 852 2203 7908 Peter Hobbs 44 207 547 4855 Cameron Dowe 61 2 8258 2683 Richard Hedley 61 2 8258 1477 Tae Kim 82 2724 4330 Marcus Wignell 44 207 545 9833 Introduction This paper introduces Shariah-compliant investment by reviewing its key terms and concepts assessing its market size and potential and outlining its opportunities and challenges for investors and financiers. Shariah-compliant investment represents a series of ethical financial transactions that are organised in accordance with Islamic law. The range of investment opportunities complying with Muslim religious beliefs has historically been fairly limited. Islamic banking is distinguished by a ban of interest-based transactions an emphasis on equitable contracts the linking of finance to productivity the desirability of profit sharing and the prohibition of speculation and uncertainty in business contracts. Saving and investing however are in line with Islamic religious principles so an increasing range of financial products are now emerging to meet Shariah rules. At the same time the capital available for deployment into Shariah-compliant investments is vast and growing. At the heart of the Middle East the countries of the Gulf Cooperation Council - Saudi Arabia Kuwait the UAE Bahrain Qatar and Oman - form a market of 38 million residents about the same population as California with a combined annual GDP that grew in 2007 to reach US 840 billion. Add to this another 430 million Muslims living outside the Middle East - many of whom reside in prosperous or growing economies .

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