Bahrain-based Gulf Finance House has unveiled Gulf Atlantic Real Estate II, a Shari'ah-compliant UK commercial property fund that aims to build upon the success of the asset manager's first UK property fund, Gulf Atlantic Real Estate.

The predecessor fund was wound up in 2005, having delivered excellent income and total returns for investors, according to Gulf Finance House. The introduction of the new fund follows a study of the UK commercial property market by the firm's real estate fund management team.

The study, which also reviewed other European markets, identified a rare cyclical buying opportunity in the UK commercial property market following significant falls in value over the past six months, with the prices of good-quality buildings falling by 25 per cent from their peak, presenting investors with the opportunity to lock into compelling income yields.

Gulf Finance House says the fund manager has already identified various properties with which to seed the portfolio. The fund will target standing properties and no speculative development is envisaged. Properties will be well located, income producing and let to good-quality tenants.

Like all the asset manager's products, Gulf Atlantic Real Estate II is structured according to Islamic banking principles and will only invest in properties approved by the fund's Shari'ah committee, which includes Sheikh Nidham Yaquby of Bahrain and Shaikh Haythim Tamim from the UK.

The fund's primary objective will be to produce a high cash yield over the life of the fund. Rigorous screening will ensure that properties also have the potential to generate attractive levels of capital growth for investors as property prices recover.

'Twelve months ago, indiscriminate, highly-geared buyers had driven prices far beyond any measure of fair value,' says Nick Judd, head of real estate fund management at Gulf Finance House and manager of Gulf Atlantic Real Estate II.

'Today, with UK commercial property values having fallen so dramatically, we have the opportunity to buy income-producing properties at prices well below their recent peaks. UK commercial property is the market of choice for many international investors who regard it as relatively low risk, transparent and liquid compared with many other markets.'

Alan Durrant, head of asset management at Gulf Finance House, adds: 'We have the people, the track record and the resources to build a well-balanced fund for our investors. UK chartered surveyors Knight Frank will once again be the strategic advisor to the fund, having been instrumental in making Gulf Atlantic Real Estate such a success. Knight Frank was involved in more UK property transactions last year than anyone else, and we are confident that their participation will add a great deal of value for our investors.'