Islamic finance offers real alternative for property development, conference will be told

As financial woes ripple across the globe more property developers are looking at Islamic finance to provide a more stable base for projects, it is claimed.

'Financing based on Islamic rules requires that gains are derived from ethical, shared investment rather than being interest-based. Therefore it has sidestepped the credit crunch,' said Swati Taneja, conference director of the twice-yearly International Islamic Finance Forum which takes place this October in Turkey.

'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. One of the most recent is Southeast 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,' continued Taneja.

To cope with added interest in this area of finance the conference, which takes place over five days from October 13 to 15 in Istanbul, there will be a special workshop on structuring Islamic real estate deals led by Mohammad Shaheed Khan, Senior Vice President and Head of Product Development and Shari'ah, at the Islamic Finance Company of the United Arab Emirates.

'This unique workshop has been designed to provide a better understanding of Islamic finance and structures for real estate development. It will examine the foundations of Islamic finance and its particularities for real estate and develop a detailed understanding on Islamic securitisation of real estate transactions,' she added.

Islamic real estate funds as alternative investments will also be examined in detail in the main forum by Naveed I Ahmad, Head of Investments and Wealth Management of Dubai Islamic Bank. In addition, the emergence of an Islamic real estate market in France – home to Europe's biggest Muslim population – will also feature.