The UK government has steadily introduced measures to help create a more level playing field for the Islamic finance sector. This facilitation has led to a rapid growth in the adoption of Islamic finance structures and products by a burgeoning number of UK real estate developers and investors, for instance.

With around 20 financial institutions offering Islamic financial services in the UK, structured real estate is seen by many as a strategically key driver of growth. On the global stage, this forward approach has paid off with the UK becoming a standout western hub for Islamic finance.

Islamic banks provide finance to developers and investors across a broad spectrum of asset classes with a particular focus in recent years on the living sector. In many instances, developers and investors who obtain finance from Islamic banks are not Shariah sensitive but are attracted by the competitive financing rates offered in the market and, crucially, the timeliness of these financial institutions’ activity. Nevertheless, there remains untapped opportunities caused broadly by a lack of awareness and education around the benefits of using Islamic finance to fund development projects.

What is Islamic finance?
In its broadest sense, Islamic finance is a way of managing money and doing business while adhering to the moral principles of Islam, such as the prohibition on the payment and receipt of interest. In the context of UK real estate, this rules out certain limited asset classes including those whose income is derived from tenants involved in sectors such as gambling and alcohol.