REAL ESTATE INVESTMENT TRUSTS & FUNDS

Crescent targets $200bn Islamic finance market

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CRESCENT Finance has launched two new Islamic compliant real estate investment funds, set to provide clients and investors with access to a portfolio of Australian residential properties.

The flagship fund, Crescent Growth Fund, will give access to leveraged capital appreciation of the value of residential real estate to investors and will be chaired by economist and former Liberal leader John Hewson.

The companion fund, Crescent Finance Income Fund, will provide access to rent from the growth fund’s residential properties which are leased to tenants with targeted returns of 3% to 4.5% p.a.

The funds will deliver the clients of Australian financial planners, self-managed super funds (SMSFs) and institutional investors access to a fully diversified portfolio of hundreds of Australian residential properties.

It is anticipated that the funds will raise $100 million by years end and will finance over $5 billion in property transactions in the next five years.

“Crescent Finance – unlike other Islamic Finance institutions, plans to provide authentic structures whereby they co-invest funds that are not simply borrowed from a conventional bank at an interest rate and wrapped in legalese to make them appear Islamically compliant,” said Dr Sayd Farook, managing director of Crescent Finance.

With the funds set to be Islamically compliant they will avoid the paying of interest, which is forbidden under Islam and will allow those who follow Islam to participate in the Australian residential property market.

“Such providers have been around for many years and in effect are mortgage broking firms with a twist and do not pass the basic smell test on ‘where did you get your money from?’ Crescent Finance plans to answer that question decisively and transparently,” he said.

In Australia only 15% of Muslims currently own their own homes, due in part to an ansence of authentic Islamic financing options. The funds, however, will be available for all investors and will not be exclusive to Muslim clients.

“One of our first customers is not Muslim and wants to use the legal infrastructure to purchase properties for his children using a self-managed super fund,” added Farook.

The market for Islamic residential finance in Australia has a potential size of an estimate $200 billion.

“I also believe that these products will have significant appeal to a wide cross-section of Australians who are looking for ‘integrity and transparency’ in financial planning after the excesses and abuses identified by the Hayne Royal Commission,” said Hewson.

Crescent Finance was established in 2020 and is part of Crescent Group, which includes the Crescent Wealth Islamic super fund which has a more than 10,000 members and manages around $300 million in funds.

“What excites me most is the equitable and social implications of the funds, allowing younger and previously excluded Australians to enter the residential property market, which has become increasingly unaffordable and inaccessible, given the stratospheric rise in property values relative to incomes,” added Hewson.