Islamic capital is increasingly a force to be reckoned within the international hotel industry. And now a $2.3bn Sharia-compliant hotel fund has been launched.
KM Properties, part of the UAE-base Al Rostamani Enterprise, announced the launch this week and plans to open its first hotel in Dubai in 2008.
The first phase of the fund is already closed but it is planned to attract international investors in future stages. International presence is expected both in the fund management and company management.
Alongside the fund, KM has created a Sharia-compliant hospitality operating company. This is being staffed by existing industry professionals.
As well as the Dubai property, a 700-room hotel that is being backed by KM to the tune of $290m, three other management agreements have been signed and a further seven are in advanced stages of negotiation.
A new brand will be launched under which the hotels will trade. Future target markets include Saudi Arabia, Morocco, Turkey, Malaysia and India. KM said it is also seeking to manage hotels under established brand names.
Sharia law requires that investors share profits in trading and business activities rather than receive interest payments which are forbidden. The recent UK Budget saw extensions to Stamp Duty Land Tax relief previously available only to individuals widened to companies, thus making the UK a possible market for Sharia-compliant funds.
And next month the European Islamic Investment Bank is planning to list on London's Alternative Investment Market, hoping to raise £200m. It expects to have regulatory capital in excess of £300m following the IPO.