Shariah compliant real estate development financing and investment in the Gulf Cooperation Council

Abstract

Purpose: The purpose of this paper is to investigate Shariah compliant real estate development financing and investment in the Gulf Cooperation Council (GCC). Design/methodology/approach: In this paper, the authors employed desk research and survey to examine issues relating to Shariah compliant real estate development financing and investment. Following the desk research, 18 in-depth interviews were conducted with senior executives of banks, real estate developers and consultants. Findings: Equity Shariah instruments are found to be in high demand by real estate investors, however they are rarely offered by Islamic banks. In addition, the survey results confirm that Islamic financiers tend to partner real estate companies through land acquisition to post construction, contrary to how conventional financiers operate, therefore reducing moral hazard issues. Research limitations/implications: As Shariah compliant real estate research and knowledge is limited, the authors faced a challenge in getting respondents who are familiar and willing to participate in the interview. Nevertheless, the 18 respondents gave adequate inputs to enable the authors to write the research paper. Practical implications: The paper includes challenges and implications for the future developments of Shariah compliant real estate development financing and investment. Originality/value: This paper provides the Shariah compliant perspective of real estate development financing and investment, where the current knowledge is very limited. © Emerald Group Publishing Limited.