An Islamic bank is investing £18m in a residential property fund aimed at buying up small apartments in London.

London Central Portfolio has received the investment from Al Rayan Bank.

The money will help finance its latest Sharia-compliant property fund, London Central Apartments III.

The fund is open until next March to investors wanting shares in a portfolio of some 50 one and two bedroom properties.

The fund aims to raise a total of £100m and projects a return of over 10% per year over a five-year period.

The minimum subscription is set at £75,000 for direct investors or £25,000 for those investing into the vehicle through regulated entities such as SIPPs, SSAS, ISAs or off-shore pension schemes.

Keith Leach, chief commercial officer for Al Rayan Bank, said: “Two key objectives for Al Rayan Bank have been to provide bespoke Sharia-compliant investment opportunities and to expand our presence in the real estate sector – particularly in Prime Central London, a favourite of both our Middle Eastern and British clients.

“Investment in prime central London property has outperformed many other investments over the last decade, and we believe that this is an exciting opportunity for investors.”

According to London Central Portfolio, almost one third of subscriptions into its Sharia-compliant funds have been from the Middle East or British Muslims.

Naomi Heaton, CEO of London Central Portfolio, said: “Muslim institutional and retail wealth is increasingly mobile.

“Political instability is encouraging Middle Eastern investors to actively look at opportunities to diversify into global markets.”