More than £250 million worth of Shariah-compliant property investment deals have been completed in Scotland in the last five years, according to a new brochure published by the Islamic Finance Council UK (UKIFC) in partnership with Shepherd and Wedderburn, BDO, Gatehouse Bank and Ocorian.
The brochure, which is promoting Shariah-compliant commercial real estate investment opportunities in Scotland, also reveals that returns on such investments exceeded the UK average in 2018.
Explaining the popularity of Scotland as an investment destination, UKIFC highlights the Scottish Government’s proactive approach to foreign investment, the country’s skilled workforce, Scotland’s connectivity and its natural habitat, as well as a network of specialist advisers and financiers for investors seeking Shariah-compliant commercial property structures.
The Islamic financial system is based on Shariah, the law of Islam, which governs Islamic societies. Along with the avoidance of interest, a key consideration for Shariah-compliant real estate financing is that the proposed use of the property is broadly socially beneficial.
Omar Shaikh, who leads the UKIFC’s government policy advisory activities, said: “There has been a marked increase in the number of Scottish Shariah-compliant deals completed in recent years in distribution centres, office blocks and student accommodation, amongst others.
“Investors have been seeking better yields than what is on offer in the London region. There are no legal barriers as the structures used to accommodate Shariah-compliant property transactions offer the same protection as those in England.
“Despite the current coronavirus crisis which is affecting economies across the world, over the medium-term the fundamentals of the Scottish market continue to present an attractive investment proposition.”
Peter Alderdice, senior associate (banking and finance) with Shepherd and Wedderburn, said: “The facts and figures highlighted in the UKIFC’s brochure certainly chime with our experience of advising a growing number of international investors seeing opportunities to realise significant returns on Shariah-compliant real estate investment opportunities in Scotland.
“Our supportive legal framework and public policy environment for Islamic finance deals, combined with the experience of professional advisers in executing transactions of this kind, have helped drive this upsurge in activity, which reflects growing confidence in the Scottish property market as a destination for Shariah-compliant investment.”
Ed Peters, tax director with BDO, said: “Over the last decade, a key area of specialism for BDO has been advising Shariah-compliant investors looking to invest in real estate outside their home jurisdictions.
“This investment has been increasingly focused outside of London’s saturated market, and more on areas which provide greater value, such as Scotland, where we have seen a number of clients making significant investments in grade-A assets such as Atlantic Quay 1 and the Edinburgh headquarters of Scottish Gas.
“We expect to see this trend continue once the impact of coronavirus eases, as investors look to geographically diversify risk and secure value.
“Our market leading team will continue to help clients achieve their objectives, providing specialist tax and accountancy advice on their Shariah-compliant investments.”