Property developers turn to Islamic alternatives

Zawya – Property developers turn to Islamic alternatives

In an increasing tough financial world hammered by the global credit crisis, more property developers are turning to Islamic financial instruments to get projects off the ground, say the organisers of the Islamic finance industry’s leading global event.

“Financing based on Islamic rules requires that gains are derived from ethical, shared investment rather than being interest-based; hence it has sidestepped the credit crunch,” said Swati Taneja, conference director of the twice-yearly International Islamic Finance Forum that next takes place in Istanbul from 13 -17 October 2008.

“The downturn in the international property markets has hit conventional realty firms as investors scale back their exposure, especially in highly leveraged markets,” she added.

“There are many new examples emerging of developers worldwide adopting the Islamic model to finance their projects,” said Taneja. “One of the most recent is South East Asia’s biggest property developer, based in Singapore, which hopes to issue the first tranche of a $700 million Islamic bond by the end of this year – with Middle East investors as the main target.

“There are few competitive sources of finance available in the conventional financial world right now. Meanwhile, there are billions of dollars in the Middle East Islamic financial sector looking for investment. But, increasingly, unless developers structure their projects to be Shari’ah compliant they won’t get a second look.

…”In recognition of the highly competitive alternative now provided by Islamic finance to conventional interest-based structures, the forum this year features a special workshop on structuring Islamic real estate deals.”

…For more details about the 2008 International Islamic Finance Forum in Istanbul, please visit: www.iiff.com