International Investment Bank, the Bahrain-based investment bank with authorized capital of $200 million (€149 million), has launched a $65 million property fund which will invest in the development of land located within the Danet Abu Dhabi Master Development Project, a new urban community in uptown Abu Dhabi.
The new fund, IIB-Abu Dhabi Properties I, will be 66.7 percent owned by IIB with the remaining 33.3 percent owned by UAE-based United Friends Company. The fund will purchase two plots of land at Danet Abu Dhabi to develop a 21-story twin tower building. One of the towers will house office units and the second will house both residential and office units. The site will also include retail and entertainment units and a parking garage. The office and residential units will be let initially and then sold. IIB said the fund will exit from the investment within four years and is targeting an annual internal return rate of 24 percent.
Saeed Abduljalil Alfahim, chairman of the International Investment Bank, said with the fund’s launch that Abu Dhabi’s population growth, which is expected to grow by 6.9 percent between 2006 and 2010, is driving a need for new housing units, with both office and residential markets seeing increases in property value as well as rent. Rental rates for the residential market in prime areas have increased by 22 percent from 2005 to 2006, he said, adding that residential rents are likely to rise at around 10-12 percent annually for the next three years.
The fund’s launch follows IIB’s recent $98 million acquisition of three commercial properties in Munich, Germany, as well as its acquisition and management of a real estate portfolio in France, valued at $105 million. IIB also recently exited from its first European real estate investment, an office building located in the Belgravia area of London. It was sold just 18 months after its purchase for $409 million, delivering a 100 percent return.
IIB was incorporated in Bahrain in October 2003 as an Islamic investment bank, with an authorized capital of $200 million and a paid up capital of $43 million. Its shareholders are high net worth individuals, business houses and institutions from the GCC states. The Bank undertakes three core business activities – private equity, real estate and asset management.