Property developers turn to Islamic alternatives

"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."

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, the unique workshop has been designed to provide a better understanding of Islamic finance and structures for real estate development.

"The workshop 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."

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.

A special session on Turkey at the crossroads will take place at the Istanbul forum which will also examine the status of Turkey's attempts to become a member of the European Union. The forum will also identify new markets for Islamic finance as well as examine Sukuk structures and capital markets; emerging Takaful development; Islamic jurisprudence; alternative asset classes including private equity and real estate; and sustainability with the greening of Islamic finance.