Shari'ah Joint Venture to Invest in Japanese Property

Stephen Harris

13 May 2005

Singapore’s CapitaLand Group has entered into a joint venture with Bahrain-sponsored investment banking group, Arcapita Bank to form a Shari'ah compliant property vehicle which will invest in a portfolio of rental apartment buildings in the key cities of Japan. Under the agreement, the Arcapita group will hold a 70 per cent stake, while CapitaLand Group will take an 18.9 per cent stake as well as providing asset management services. The asset portfolio size for the joint venture is targeted to reach $300 million within the next eighteen months. The project is CapitaLand's first Shari'ah compliant joint venture and will cater to the growing demand amongst institutional investors and high net worth individuals from the Middle East for Asian-based investment opportunities. By entering into this joint venture with CapitaLand, Arcapita is leveraging on CapitaLand's expertise in asset management and real estate investments in Asia to provide its client base with a real estate investment featuring an attractive risk/reward profile, and to add geographic diversity to its existing stable of property investments in the US, Europe and the Middle East. For CapitaLand, this joint venture enables the Group to tap into Arcapita's pool of high net worth individuals and institutional investors in the Arabian Gulf region, and to establish a strategic relationship with one of the leading Islamic financial institutions.