Acorn Shariah Compliant Property Investments give qualified investors exposure to UK real estate through ethically screened projects.
But as with most property-backed investments, there’s a risk of default or capital loss if the developer or project underperforms.
This article is intended for non-UK resident investors who want to understand how Acorn’s Shariah-compliant property investments work, their potential benefits, and the risks to consider before investing.
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The information here is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.
It’s important that as an investor, you get to grasp what these types of investments really mean, and a financial advisor can help with that.
Who are Acorn Property Group?
Acorn Property Group is a medium-sized residential construction firm rolled out in 2015 that specializes in the Southwest of England.
They have fulfilled more than 200 projects in key areas like:
- Bath
- Bristol
- Cotswolds
- Cornwall
- Devon
- Vale of Glamorgan
The Shariah Compliant Property Investments is offered by Acorn Property Invest, the fundraising division of Acorn Property Group.
Acorn Shariah Compliant Property Investments
Investors designate Acorn as their investment agent to handle money in a Shariah-compliant way under the Wakala structure.
Wakala is associated with the Murabaha product, which is the foundation of financing that complies with Shariah.
Buying a property or asset, splitting ownership, and then reselling it with a profit is known as murabaha. This links financing to physical assets, preventing increases in the money supply without a matching growth in assets and assisting in the control of inflation.
For investors who would rather assign investing decisions, the Wakala structure offers a passive approach.
Acorn Shariah-Compliant Portfolio
Acorn provides two categories of financial instruments.
Redeemable share options, which offer fixed-rate, fixed-term returns in addition to a portion of the profits upon completion, are the first choice available for specific development projects.
A fixed-income portfolio consisting of redeemable share options spread across multiple projects is the second option; it pays quarterly income.
Investors are able to attain both income and capital growth by combining the two types, and they are able to hold an unlimited number of options at the same time.
Using their online platform, Acorn Property Invest provides halal investors quarterly payments; alternatively, they will get paid all at once when the project is finished, including any portion of the anticipated profit.
For regular income, a minimum investment of £5,000 allows investors to participate in a fixed-income investment across a range of build developments, with terms ranging from 1 to 5 years and fixed annual rates. Investments can be rolled over to achieve higher returns through capital growth.
For capital growth, a minimum investment of £5,000 enables investors to invest directly in an individual development, with investment terms ranging from 1 to 4 years and fixed annual rates. Investors can also share in the success of the development through a profit share.
Acorn Property offers up to 15% annual rates.
Ashton Fields Project
In January 2023, Acorn Property Invest announced it secured full planning from authorities.
St Leonards Quarter Project
In two phases, this development will provide 146 townhouses and apartments in one of Exeter’s hottest districts.
Old County Hall Project
The two phases of this Truro development include a Grade II-listed conversion and a modern apartment structure constructed on an existing parking lot behind the listed property.
In 2022, Acorn Property Invest was reportedly kicking off a Shariah-compliant product with yields of 5% to 9.5% per year.
Acorn offers all of its developments for sale off-plan.
Who can invest in Acorn shariah compliant property investments portfolio?
- high net worth individual
- sophisticated investor
- certain pension fund trustees
Acorn Performance
So far, Acorn Property Invest has never missed an investor repayment due to its stringent investment criteria and thorough due diligence procedure.
Before making a commitment, Acorn Property Invest thoroughly evaluates each investment opportunity to make sure that all funds are safe and have a high chance of yielding profits.
That doesn’t mean they can not default, though. There’s still that risk.
Acorn Property Invest targets to complete more than 2,000 homes worth over 1.2 billion pounds within the subsequent three to five years.
In 2023, the business rolled out Acorn Green as part of its zero-carbon move for new homes development.
How does Acorn investment work?
Mezzanine investors are offered redeemable shares by Acorn Property Invest in return for their capital.
Shares of stock that are redeemable are those that the issuing business may buy back at any time after a specified date or after a particular event. Companies frequently issue these to raise funds or finance particular initiatives.
They have made available investment opportunities worth roughly £400 million in total gross development value.
Pros and cons of Acorn Shariah Compliant Property Investments
Shariah Compliant Property Investments Benefits
- In line with Shariah principles, Acorn Property Invest focuses on developments that are both socially and environmentally beneficial.
- To make sure they adhere to Islamic principles, the properties and assets are subjected to stringent Shariah compliance examinations.
- The set returns offered by the Shariah portfolio give investors a steady stream of income.
Shariah Compliant Property Investments Risks
- Shariah-compliant property investments are typically illiquid. Investors may find it difficult to exit or sell their holdings before the project concludes.
- Since only certain types of assets and financing structures qualify under Shariah law, the range of available investment opportunities may be narrower compared to conventional property funds.
- Avoiding interest-based and highly leveraged projects can limit the ability to generate higher yields seen in conventional developments.
- Shariah-compliant structures often require additional legal and financial oversight to remain compliant with both local regulations and Islamic law, which can delay project timelines.
- The success of the investment depends heavily on Acorn’s management expertise and its ability to execute projects efficiently while maintaining Shariah compliance.
- While returns are projected, Shariah-compliant investments operate on a profit-sharing or rental income model rather than fixed interest — meaning profits are not guaranteed and may fluctuate.
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Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.
