Islamic real estate investment trust: comparative study between emirates Islamic REIT UAE and Al Salam Islamic REIT Malaysia

Abstract

Purpose The Islamic Capital Market (ICM) has witnessed tremendous growth over the years. One of the most interesting growth curves in the ICM instruments is that Islamic Real Estate Investment Trusts (I-REITs). The purpose in this paper is to highlight the concept of I-REIT and to presents a comparative analysis for Emirates I-REIT and Al-Salam I-REIT of UAE and Malaysia to find out the implications of the major differences between the two countries I-REITs. Design/methodology/approach This paper uses the data in the two I-REITs' financial reports from the years 2015 to 2019. A descriptive (Observational design) data analysis approach is used in comparing both I-REITs by focusing on five different variables that include: portfolio, governance, financial performance, Shariah compliance and risk management. Findings The findings offer evidence of key differences between the two countries regarding the I-REITs. The differences found in the implication for all variables that the paper presented, especially the size of the portfolio for each I-REIT along with the Shariah compliance and risk management, Al Salam “Malaysia” used more standard approach than UAE in which the SSB is responsible for setting the guidelines for Emirates REIT. Also, the risk management technique used by the two REITs differs from one another. Practical implications This research paper provides an insight for the capital market sectors as an initiative to improve and develop the ICM to play its important role in the economy. Originality/value This research paper is an initiative to compare and evaluate the implications of major differences between the I-REITs of the two countries only in the light of recent development in the ICM.