Ethical Asset Management (EAM), a UK-based asset management firm that complies with Islamic Shariah law on finance, claims to have launched the world's "first true" investment sukuk (Islamic bond) for Muslims.

A multimillion equity-only investment fund will be raised in order to buy assets in Britain's booming student accommodation market as cities across the country struggle to meet the property needs of their university students.

The instrument will be called the Ethical AM UK Student Accommodation Investment Sukuk.

"Unlike other so-called sukuk in the Islamic finance industry, which are identical in all but name to other products such as those in the conventional bond markets, EAM will purchase real assets outright and provide investors with full ownership," Saadat Khan, founder and chief executive, said.

It leaves them exposed to the risk and reward that is "integral in a Shariah transaction".

"This is in line with how a sukuk should truly be - a genuine investment, not a debt," he said.

Sukuk are bonds that meet Islamic rules about how Muslims should handle their finances, including that any investments must service some of society's needs.

The company believes that investors will see an annual net return of 4-6 percent on the £200m it hopes to raise.

"We want to provide a commercially viable option that is a true win-win for all concerned, which does not rely on debt and can still deliver secure and stable returns," Khan said.

Student properties in university cities across Britain will be bought up by the fund, because high demand from students whose accommodation needs are not fully being met by the property market are inflating rental rates, garnering a higher return for investors, said the company.

Universities cannot keep up with the demand because government budget cuts are making it difficult for them to build new accommodation, leaving them looking to the private sector.