Investment manager Pinebridge’s new GCC Real Estate Fund will help meet the growing need for new financing sources in the Middle East, says the fund’s CEO, Talal al-Zain.

“There is substantial demand to provide alternative funding,” Al-Zain tells MEED, noting that as regional economies develop, the need to find various means of financing this growth becomes more acute.

The US-based company completed the first close on its fund in early June, having raised more than $140m. It surpassed its first close target of $100m and aims to hit a final close target of $200m “very shortly”, according to Al-Zain.  

The fund gives investors a chance to invest in income-producing real estate assets within the Gulf, which covers existing properties in specific sectors of logistics and warehousing, community retail, healthcare and education infrastructure.

The sharia-compliant fund helps businesses in these sectors finance their expansion by buying their assets and leasing them back on a long-term basis. This helps unlock capital in their real estate assets and allows companies to reinvest in their growth plans.

Al-Zain says there are growing investment opportunities in the region’s community or neighbourhood retail sector, a trend that is fuelled by the increasing number of new residential communities being built.

“We are moving away from the souk concept,” he said, explaining that the market trends are evolving from having a central market place in a city or having mega mall complexes towards having smaller neighbourhood shopping outlets.

Demand for healthcare and education infrastructure in the Gulf is also growing and is attracting increased investment. In the UAE, 200 additional private schools will be required by 2020 to meet demand.

Pinebridge currently manages about $71.4bn in funds, as of 31 March 2014.