KUALA LUMPUR, 2 August: Australian Islamic investment company Crescent Wealth, which jointly launched the KAF Australian Islamic Property Fund (KAIPF) with KAF Investment Funds Bhd yesterday, is confident of achieving 9-10% annual return to investors of the new fund.
Crescent Wealth corporate strategy and development director Omar Khan said the target is driven by projected returns and capital appreciation of commercial properties in Australia and the appetite of Malaysian investors for Australian property.
“What we’ve observed with Malaysian investors is that they are looking for offshore investments. Malaysian investors want offshore exposure, they want to diversify away from the ringgit and that’s a really important characteristic,” he told reporters at the launch yesterday.
Omar said that recent data from Australia’s Foreign Investment Review Board found that Malaysia was the fourth largest source country for approved Australian property investment after China, the US and Canada.
The KAIPF is Malaysia’s first fund that provides non-institutional investors direct access to Australian commercial property. The feeder fund invests into Australia’s Islamic property fund Crescent Diversified Property Fund (CDPF).
Launched in February 2013, CDPF invests in Australian listed real estate investment trusts (50%) and direct property assets (50%) such as offices and factories. It has delivered an average return of 17.9% per year and a total return of 70.34% as at June 30.
Omar said it aims to deliver 9-10% annual return by targeting 7% in income yield and 2-3% in capital appreciation. The fund will distribute income on a half-yearly basis.
Some of the assets in CDPF are Chadstone Shopping Centre in Melbourne and 1 Bligh St in Sydney. It is also in the final stages of due diligence to acquire 20% stake in five aged care centres that come with a 20-year lease with the operator.
The KAIPF is an open ended fund with no maximum size restriction and its target fund, the CDPF, has a gross asset value equivalent to about RM200 million now. The initial target subscription for KAIPF is A$30 million (RM100 million) for the first six months.
Omar said the commercial property market in Australia is delivering very strong returns now and office space in the central business districts of Sydney and Melbourne are seeing very low vacancies due to shortage of new office space.
“The commercial property market in Australia is a very deep and diversified market. Though our mandate is national so we can invest right across Australia, our current focus is Sydney, Melbourne and to some extent Adelaide and Brisbane,” he said.
Crescent Wealth is an Islamic investment firm offering a pension fund and a series of managed funds across Australian equities, international equities, diversified property and Islamic cash and fixed income.
The launch of KAIPF brings the total number of funds under KAF to 18, with close to RM2.3 billion worth of assets under management.