MANAMA: Islamic investment bank Gulf Finance House (GFH) plans to launch a £50 million ($74m) UK commercial property fund and a $50m sukuk, or Islamic debt fund in the Gulf region, an executive said.

The UK commercial real estate market is a mature, well-regulated market with attractive opportunities, Alan Durrant, head of asset management at the Bahrain-based bank, told the Reuters Islamic Banking and Finance Summit in Manama yesterday.

"We're marketing the fund at the moment. We will probably launch a series of similar funds on the same kind of asset and then bring them together for the economies of scale," Durrant said.

"Today it's possible to buy very good quality buildings and to buy those on a cash yield of 7.5 to 8 per cent," he said, adding that the British residential property market would remain weak for the rest of this year.

A second property fund could be set up this year, he said, adding: "There could be a property fund dedicated to the US market."

The $50m sukuk fund, to launch in the next two weeks pending regulatory approval, would focus on "government, quasi-government, or very stable" issues in the Gulf region.

By "quasi-government", Durrant said he was referring to state-linked issuers such Dubai International Financial Centre, port container operator DP World and Jebel Ali Free Zone.

Older, well-established companies such as Saudi Basic Industries Corporation were what he considers as issuers of "very stable" sukuks.

He said investing in quasi-government sukuks could achieve a cash yield of around 10-12pc, but more "adventurous" sukuks could give returns of as much as 20pc.