n 15 June 2008 n TheBusinessWeekly
uaespecial
RakBank’s Islamic unit all set to operate
To be capitalised at
Dh200m; will focus
on high-end
products
Amit Chettupuzha
RakBank is all set to launch its
Islamic finance company which
will be initially capitalised at
Dh200 million which is the mini-
mum capital prescribed for Is-
lamic subsidiaries of convention-
al banks.
‘Low-cost projects not feasible in the UAE’
Construction costs and restraints on
technology said to be inhibiting factors
Jim Paolo Joquico
Low-cost real estate projects
aimed at the low- to middle-in-
come segments are not feasible
in the UAE, according to Tariq
Ramadan, chairman of UAE-
based Tharaa Holding.
Speaking to The Business
Weekly along the sidelines of
TBW June 15 (a).indd 8
Talking to The Business
Weekly, the general manager of
RakBank, Graham Honeybill,
said the mandate of the new Is-
lamic entity will be to focus on
high-end structured products and
not to indulge in mass products
for the time being.
“After the initial period, we
may seek to go deeper into the
market and cater to the masses,”
he added.
Already, banks such as First
Gulf Bank, National Bank of
Dubai and Union National Bank
have initiated a process or estab-
lished their Islamic finance com-
Tariq Ramadan
the holding company’s launch of
its real estate investment and
management arm, Hadara Real
Estate, Ramadan mentioned two
facts that render the concept im-
practicable.
“Frankly speaking, develop-
ing projects for the mid-income
panies.
The Islamic finance compa-
nies are allowed to carry out all
activities of a bank except raising
deposits from individuals.
Huge mortgage market
There were reports in the
press that conventional banks
had sought a licence to establish
an Islamic finance company in or-
der to tap the huge Islamic mort-
gage market in the UAE.
According to sources, almost
75 per cent of the mortgage mar-
ket in the UAE is controlled by
Islamic entities with about 60
and low-income segments are
not feasible for developers be-
cause of high construction costs.
Additionally, there is limited de-
mand for such types of projects,”
he said.
“Being a geographically di-
verse company, we might be able
to launch mid-income projects,
but definitely not in the UAE.
We may be able to do it in Egypt
or Jordan, where there is high
demand and construction costs
are significantly lower,” Ram-
adan said.
VoIP ban
Besides high construction
costs in the UAE, other factors
such as government policies on
certain technologies may affect
the possibility for developers to
launch specific types of projects.
For instance, Hadara presented
four conceptual designs for its
future projects, one of which is
the Telecom Village.
Hoping to become the busi-
ness centre of all telecommuni-
cation companies, call centres
and outsourcing businesses, the
development will function in
similarity to existing clusters in
Dubai such as the Dubai Inter-
net City (DIC) and Dubai Media
City (DMC).
However, the UAE Govern-
ment’s ban on the Voice over In-
ternet Protocol (VoIP) technology
may compel Hadara Real Estate
per cent being shared between
Tamweel and Amlak Finnace
alone.
RakBank has also received
an approval to open 10 branches
within the UAE.
Honeybill said this privilege
given by the Central Bank as a
reward for performing well and
complying with Central Bank
regulations will be utilised within
two years.
He said this expansion would
take the total number of branches
from the present 26 to 36 by the
end of 2009 or the first quarter of
2010.
to develop the project in another
country. “This project has to be
a partnership with a local gov-
ernment. We cannot do it on our
own because it requires authori-
sation to use VoIP, which is cur-
rently not available in the UAE,”
he pointed out
“It depends on which govern-
ments allow the use of the tech-
nology within their country and
we will start from there,” Ram-
adan added. Hadara Real Estate
plans to both develop and man-
age properties worth Dh1 billion
during its first year of operation,
and hopes to achieve a total in-
vestment and management port-
folio of anywhere between Dh10
billion and Dh20 billion over the
next five years, once the compa-
ny has become fully confident of
its operations.
“However, it is also worth not-
ing that it is becoming more and
more difficult to find good invest-
ment opportunities and good lo-
cations in addition to the growing
number of real estate companies
in the market,” Ramadan added.
The company’s strategy in-
cludes plans to construct projects
in the UAE, the Middle East and
North Africa region, on account
of attractive real estate opportu-
nities in Morocco, Oman, Jordan
and Syria. Hadara is currently
preparing to participate in City-
scape Dubai and structuring sev-
eral types of projects.
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