Cyprus realty fund eyes Oman market

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MUSCAT - Cyprus-based Elements Property Fund plans to invest in residential real estate in Oman through a new fund to be launched after it exhausts the corpus of its recently announced South East European Heritage Property Fund, senior officials said here.

"We are definitely looking at Oman from an investment perspective as it has a lot of growth opportunity," said Savvas A Liasis, director, Elements Property Fund.

The European Heritage Property Fund, which would invest in properties having historical, cultural or architectural value in various cities in western and southeastern Europe, is also looking at investors in the Sultanate, Liasis said.

There are high net worth individuals (HNIs) and families in Oman, which have shown interest in the fund, he said. "We were taken aback by the response here." The officials would be meeting more than a dozen investors in Oman through a road show early next month followed by similar meetings in Qatar and UAE.

The fund has secured debt to the extent of 400 million euros and is looking to raise 100 million euros through equity from 25 investors, Liasis said. "We expect pension funds or endowment money mostly from the US and HNIs from this region". The mandate of the fund is to renovate and develop old heritage structures located near prominent locations of key cities in at least half a dozen countries, director Ugur Yildirim said. It was looking at cities such as Istanbul, Belgrade, Bucharest, Athens, among others. "We see a shift towards city centres in southeastern Europe," he said, adding about a fifth of the corpus would be invested in similar properties in bigger global cities.

The open-ended fund would have an initial lock-in period of three years and is looking at an internal rate of return (IRR) in excess of 50 per cent, Liasis said. It aims to generate rental income within six to nine months and capital returns from sale of developments within 12 to 18 months after becoming fully invested in two years, Yildirim said.

"We would look at rentals (income) more in western Europe and capital appreciation from sale in south eastern Europe," officials said, adding the fund would earn rental income from about a fifth of its investments. Speaking further about the advantages of investing in such a fund, Liasis pointed out that it would not be taxed at the hands of the fund managers as the fund is based in Cyprus.

© Times of Oman 2009