JLL: How Islamic finance is shaping Europe’s property markets

Sharia Law Financing

JLL Real Views provides an examination of Middle East investment in Europe, and how projects are being financed under Sharia prescript.

The Shard, Battersea Power Station and Chelsea Barracks, which JLL calls "three iconic construction projects," all were built using Sharia-compliant finance.

As JLL's Claudio Sgobba, director in JLL’s debt advisory team in London, points out, Sharia-compliant funds are providing an important source of cash for the London real estate market, with investors from Saudi Arabia, Kuwait and Qatar along with growing interest among investors in the United Arab Emirates and Bahrain.

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He says that about 60 percent of JLL’s Gulf client base who invest in Germany and the UK require Sharia-compliant investments and finance. “The UK is the number one Islamic finance centre in the western hemisphere,” he said. “London has a critical mass of qualified professionals in this area and English law is often used to govern Islamic financial transactions.”

There are many ideas of what is sharia compliant means. Muslim investors, for example, generally avoid bars, gambling premises, breweries and distilleries although some investors would allow hotel investments provided revenues from alcohol sales are less than five percent of what the asset generates.

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