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Wakaf Real

 Estate
What  Works  for  Impact  Investing  &
Value  Creation

Friday,  3  November

Zaini  Osman  |  CEO  |  Warees  Investments  Pte Ltd    |    Singapore


WAKAF
What  Works?

[in  local  context]


Invest  in  TRUST
commercial  objectives  
+  
community  outcomes  
[see  old  reality  with  a  new  set  of  eyes  ]

Invest  in  TRUST


Is  investing  in  bankable  Wakaf projects  for  immediate  social  benefits
indeed  a  direct  model  of  Impact  Investment?

Investments  made  into  companies,  organizations,  and  funds  with  


the  intention  to  generate  social  and  environmental  impact  
alongside  a  financial  return.
[see  old  reality  with  a  new  set  of  eyes  ]

https://thegiin.org/impact-­‐‑investing/ Invest  in  TRUST


Reframing  Our  Mental  Model:  
Going  beyond  “brick  and  mortar”,  generating  income  for  the  socio-­‐‑religious  programmes

Wakaf  is  not  just  about  maximising  value;


by  stretching  dollars  &  cents  nor  by  optimising  space  
putting  together  “brick  and  mortar”,  but:-­‐‑

a) Have  we  fulfilled  the  intent  of  the  Wakif  and  providing  
sufficiently  to  the  objectives  and  spirit  of  the  Wakaf?

b) Are  we  positioning  the  Wakaf  to  benefit  community  from  


the  growing  &  lucrative  property  market  where  these  assets
are  operating  in?

c) How  do  we  respond  to  a  volatile  market  while  sustaining  and  
improving  disbursements  to  beneficiaries?

Invest  in  TRUST


Stakeholders  are  our  partners  – Factor  in  their  perspectives

1. Managing  our  stakeholders  in  a  delicate  manner  – we  must  


always  understand  their  perspectives  first.

a) How  do  we  handle  interested  parties  who  made  a  claim  on  a  Wakaf  
property?

b) How  do  we  build  trust  with  the  larger community  and  agencies  to  
harmonise  wakaf’s  social,  commercial  and  religious  objectives?

c) How  do  we  manage  beneficiaries  but not  wakaf  owners?

d) With  Muis  as  regulator,  how  do  Warees  balance  between  policy  
thinking  and  commercial  objectives  (maximising  returns)?

Invest  in  TRUST


Competition drives better commercial  outcomes  for  beneficiaries

2. Challenges  of  maximising  value  of  an  asset  in  prime  districts.

a) What  do  we  understand  about  competing  products  and  market  


movements  in  the  area  (sales  price,  recent  developments,  rental  market)?

b) With  minimal  resources,  how  do  we  create  a  lasting  project  that  is  
appealing  to long  term  investment that  generates  sustainable income?

3. Need  for  strategies  to  continue  to  be  nimble  over  a  long  
gestation  period, subjected to  property  cycles  and  economic  
conditions.

a) How  do  we  continue  to  be  agile  against  an  environment  that  is  constantly  
changing?

b) How  do  we  innovate  commercially  viable  options  to  meet  expectations  of  
all  stakeholders?
Invest  in  TRUST
Part  1  
Snapshot  of  Wakaf Sector  in  Singapore

Part  2  
Setting  the  (Right)  Formula

Part  3
Innovation  &  Wakaf Transformation
(Value  Creation)
Part  1  
Snapshot  of  Wakaf Sector  in  Singapore

Invest  in  TRUST


State  of  Wakaf assets  in  the  early  days…

1 Dilapidating  condition;  not  tenantable


§ Most  were  in  a  state  of  neglect  
§ Real  possibility  for  Government  to  exercise  powers  under  the  
Land  Acquisitions  Act  to  acquire  and  redevelop  these  areas
§ Low  rents  – affected  by  Rental  Control  Act

2 Potential  not  maximised


§ Wakaf  properties  are  worth  millions  in  value  if  development  potential  realised
§ Mainly  in  the  form  of  land  &  commercial  properties  located  in  the  prime  
districts  
§ Not  utilised  to  the  maximum  capacity  to  generate  income

3 Low  in  value


§ Real  estate  in  Singapore  moved  in  an  upward  economic  trajectory
§ Value  of  Wakaf assets  had  not  kept  pace  with  the  growth
Invest  in  TRUST
Favourable conditions  for  value  creation

Potential  of  Wakaf Properties


§ Singapore  has  a  sizeable  portfolio  of  
Wakaf properties The  Red  
House  
11  Beach        
Rd  (Fusion)

§ Strategically  located  in  CBD,  prime   Somerset  


districts Bencoolen

§ Soaring  property  prices  during  past  


decade
Marina  
Bay  
Orchard  
§ Market  offers  potential  high  returns Rd
Sands

§ Hence,  opportunity  costs  of  leaving  wakaf


properties  undeveloped  were  high
Invest  in  TRUST
Religious  guidance  on  wakaf
(a  “game  changer”)
2 Progressive  Fatwa

§ In  1988,  Fatwa  Committee  issued  a  ground-­‐‑breaking  


ruling

§ Allowed  for  the  implementation  of  the  concept  of  


Istibdal or  asset  migration

§ Higher  value  assets  acquired  by  selling  off  non  or  


poor  performing  assets,  assets  in  danger  of  acquisition  
or  located  in  unsuitable  location

§ Ensures  wakaf management  is  supported  by  


religious  foundations

§ Increases  the  trust  and  confidence  of  the  community


Invest  in  TRUST
Relevant  laws  and  legal  framework  to  support  wakaf

3 Constitution  is  a  key  foundation

§ First  enacted  in  1968  &  last  amended  in  2017

§ Administartion of  Muslim  Law  Act  (AMLA)  gives  


autonomy  to  MUIS  as  the  Wakaf regulatory  body

§ Better  safeguard  against  mismanagement  of  wakafs,  


MUIS  to  have  greater  say  over  appointment  of  
trustees,  ensure  enough  sinking  funds  available,  etc.

§ Regular  reviews  and  amendments  ensures  AMLA  


stays  relevant  and  up-­‐‑to-­‐‑date  to  meet  the  changing  
The  Straits  Times,  4  Mar  2017
needs  of  the  society  

Invest  in  TRUST


Credible  Public  &  Commercial  institutions  accelerated  
Wakaf development  in  Singapore

Warees  Investments  was  incorporated  in  


Sept  2001  (fully  operational  2002)
Majlis Ugama Islam  Singapura   Warees  Investments  Pte  Ltd
(Muis)

Statutory  Board   Independent  Board  of  Directors  appointed


focused  on   (separate  from  Muis Management)
Socio-­‐‑religious  functions,  
governance &  policymaking A  Baitulmal Company
100%  wholly  owned  subsidiary  of  MUIS
Formerly  Property  Development  Department  of  Muis

Invest  in  TRUST


Wakaf Assets  in  Singapore

MUIS-­‐‑managed Mutawalli-­‐‑managed

Wakaf  Accounts 67 33

Wakaf  Properties 72 69

Investment  Property  
$316M $333M
Valuation

Gross  Income $7.9M $7.6M

Gross  Yield 2.5% 2.3%

Managed  by  Warees Investments

*  All  figures  are  as  of  FY  2016


**  Under  the  Administration  of  Muslim  Law  Act  or  Amla,  ‘mutawalli  means
a  person  appointed  to  manage  a  wakaf  or  mosque  &  includes  a  trustee. Invest  in  TRUST
Value  of  wakaf properties  developed  continue  to  grow

Average
Name  of   Average Year  of   Average  PSF  
Type of  Property PSF  Resale  
Property Size  (sqft) Completion Sold  *
2016
Telok Indah Condominium 1615 1995 $450.67 $802.66
The  Chancery  
Townhouses 3370 2005 $413.25 $730.00
Residence
Heritage  
Condominium 1345 2008 $594.67 $800.00
Residences
Stillz  
Condominium 1184 2011 $912.87 $987.00
Residence

The Red  House Condominium 559 2016 $1,562.00

Semi-­‐‑Detached  
Alias Villas 3250 2017 Ranges from  $1,450  – 1,550
Cluster  Housing
Source:  REALIS,  URA

Invest  in  TRUST


Part  2  
Setting  the  (Right)  Formula

Invest  in  TRUST


1 Searching  &  understanding  the  objectives  to  
RIGHT achieve  the  right  outcome
OUTCOMES
ü Search  &  understanding  the  intent  of  the  pewakif thru  wakaf
deeds,  research  and  fact  finding;
ü Protect  wakaf from  acquisition  and  disrepair;
ü Generate  higher  income  for  the  beneficiaries  as  end  point;

Disbursement  Distribution
*FY  2016

16% Mosque

Madrasah
49%
22% Organisation  &  
Others
Overseas
13%
Berita Harian,  24  April  2014 Invest  in  TRUST
2
RIGHT Sukuk Musharakah –
FINANCING   Adopted  to  redevelop  Wakaf Bencoolen
INNOVATION

ü Prime  location  within  1.5km  to  the  city  centre;


ü Huge  commercial  potential  ;
ü Redeveloped  a  mosque  &  4  units  of  2-­‐‑storey  shophouses into  12-­‐‑
storey  mixed  development  of  Bencoolen Mosque  &  107  units-­‐‑
serviced  apartments  and  several  commercial  units;
ü $35m  Sukuk Musharakah was  structured  to  finance  development  
cost  (2004)
Wakaf Bencoolen

Invest  in  TRUST


2
RIGHT
FINANCING   Institutional  Investments  Initiative  (3I)
INNOVATION ü Allows  community  institutions  to  participate  &  benefit  
from  the  hibah returns  for  their  social  needs;
ü Surplus  funds  from  institution  helped  in  funding  wakaf 3  I Hibah
developments;    
ü Encourages  investors  to  rethink  about  Corporate  Social  
Responsibility

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3
Real  Estate  Development  as  a  product  to  meet  
RIGHT
market  demands
PRODUCT
ü Essential to study each wakaf property differently
ü Determine the best concept and mix to attract good sales and rental market
ü Establish target sales & rental segment for commercial, retail & residential
ü Develop unique & valuable investment product

Invest  in  TRUST


4
RIGHT Constant  search  for  talents  to  value-­‐‑add  the  team
TALENTS
ü People  with  passion  in  diverse  fields  are  central  to  our  capabilities:
• Finance  &  Accounting • Islamic  Finance  &  Syariah
• Real  Estate • Business  Administration
• Engineering • Marketing
• Architecture • Construction  Management
• Economics  and  Statistics • Project  Management

Staff  Profile  by  Age  (%)


Distribution  by  Employee  Category  (%)

1% 12% 15%
12%

27%
87%
46%

Non-­‐‑Executive
Professionals,  Managers  &  Executive   20-­‐‑29 30-­‐‑39 40-­‐‑49 >  50
Senior  Management
Invest  in  TRUST
5
RIGHT Continuously  build  rapport,  trust  and   W
COMMUNICATION   relationship  with  stakeholders co-­‐‑creation
&  
ENGAGEMENT ü Constant  sharing  of  progress  on  Wakaf  developments  and  
best  practices  to  community;
ü Consistent  engagement  get  feedback  and  views;
ü Create  variety  of  platforms  to  touchbase with  stakeholders

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5
RIGHT Reach  out  to  stakeholders  on  print  &  social  media
COMMUNICATION  
&  ENGAGEMENT
platforms

Facebook  Page:  
Warees Insights  (Annual  Bulletin)
https://www.facebook.com/aliasvillasbywarees/

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Part  3  
Innovation  &  Wakaf Transformation  (Value  Creation)

Invest  in  TRUST


Case  Study:  The  Red  House  (2013-­‐‑2016)  
From  a  dilapidating  property  to  an  Integrated  Heritage  Development

42  residential  units  set  in  3  different  classes  with  5  retail  shophouses,  1  historic  bakery  shop
Invest  in  TRUST
Case  Study:  Wakaf Al  Huda  (2014-­‐‑2017)
Old  kampong  houses  to  luxurious  residential  semi-­‐‑detached  villas

6-­‐‑units  strata  semi-­‐‑detached  cluster  housing

Invest  in  TRUST


Unlock  Land  Value  of  Wakaf Al  Huda  beside  a  mosque

Further  optimization  of  


wakaf land:

Redesign  from  initial  4  


Land  area  :  1,504  sqm semi-­‐‑detached  units  to  6   Land  area  :  1,296  sqm
strata-­‐‑units.

PHASE  2
6  units  of  semi-­‐‑
detached
PHASE  1 residential  
Al-­‐‑Huda   development
Mosque
enhancement

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Invest  in  TRUST
Al-­‐‑Huda  Mosque  as  beneficiary,  
enhanced  before residential  
project  begun

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Capturing  the  
Imagination  into  Reality

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Conclusion
• Wakaf are  valuable  assets  
with  potential  upsides;

• Must  be  managed  with  


tight  governance  and  
prudence;

• Commercial  viability  is  


key  to  generating  good  
returns;

• Returns  are  all  for  


beneficiaries  &  
reinvesting;

• Put  in  place  the  right  


systems,  proper  planning  
and  only  with  committed  
talents, one  by  one  each  
asset  can  be  transformed,  
InsyaAllah.

Wallahu’alam

Invest  in  TRUST


Thank  You
Invest  in  TRUST

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