The Case for Real Estate Investment trusts in Dubai
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Date
2008-11
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Publisher
The British University in Dubai (BUiD)
Abstract
With Real Estate Investment Trusts becoming an increasingly popular means to invest in the real estate market in the developed countries in recent years, it is of interest to this research whether recent legislation in Dubai will have the similar effects. Despite the growing demand for Islamic Finance products and services in the region coupled with a robust real estate market there have not been any significant studies to engage the concepts of REITs in Dubai and its adherence to Shariah principles.
This research examines the basis of Islamic Finance, the theory of capital structure as proposed by Miller and Modigliani (1958), and previous studies on the performance of Real Estate Investments Trust in other markets in order to gauge whether unleveraged REITs in Dubai will optimise a mixed asset portfolio whilst complying with the principles of Islam. Hypothetical Property Trusts have been created to act as proxy for the performance of REITs in Dubai which include one that is debt free and two that are incrementally leveraged.
With the local equity market and local corporate bond market representing the two other asset classes that are included in a mixed asset portfolio, it is that of the Real Estate Investment Trusts that have proven to be the dominant asset class. The inability of borrowing to enhance the performance of the Hypothetical Property Trusts gives credence to the ability of unleveraged REITs to optimise a mixed asset portfolio whilst complying with the principles of Islam and hence laying the foundation for the growth and popularity of REITs in Dubai.
Description
DISSERTATION WITH DISTINCTION
Keywords
real estate, investment, Dubai