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Unlocking a pent-up demand: Shariah-compliant investment poses challenges for Islamic institutions…and an opportunity for real estate fund managers
Muslims make up roughly 25 percent of the world’s population, and 40 percent of the world’s fastest-growing countries have large Muslim populations. This rapidly-growing demographic has propelled Islamic finance and Shariah-compliant investing from a relatively esoteric asset class, when the modern banking system began to offer Shariah-compliant products in the 1970s, to today’s global industry, with total assets of approximately US$2 trillion.
While this currently represents a small share of the global financial industry, the rapid growth of wealth within the global Muslim community has led to an increased demand for Shariah-compliant financial products and services, which is expected to continue for years to come. As the demand for Shariah-compliant life insurance (takaful) and pensions grows, institutional investors need to acquire Shariah-compliant assets as they look to cater to the Islamic consumer.
The challenge facing Shariah-compliant institutio