Introducing Qatar’s loan stars

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Each week Arabian Business turns the spotlight on a leading company.

What exactly is Barwa?

It's a real estate company based in Qatar. It's not just another real estate company, though - this is actually one of the largest publicly listed real estate developers in the region. It currently has around US$3.76bn of mega-projects under development in the region.

That sounds pretty big. Why does Barwa need to take a loan out then? I thought it had already taken out a hefty one a couple of months ago?

Yes, you're right. It took out a US$600m loan arranged by Bahrain's Gulf International Bank to fund real estate projects in August of this year. This latest Islamic loan for US$800m is to fund ‘general corporate activities' and is said to be in addition to its previous secured loan.

Remind me again what an Islamic loan is?

Islam does not allow lending on interest so in a murabaha deal the lender buys a commodity and sells it to a customer at a higher price, locking in profit. Islamic banking is a popular way of banking and its practices are spreading to other non-Islamic countries pretty quickly.

Okay, let's get back to Barwa. Didn't it earn a load of cash in Paris recently?

Yes actually it did. How did you know? Barwa bought the Paris convention centre for US$619.9m in April this year and just four months later sold it, making a 13% return on its profits. The company said that it had previously planned to spend US$574m on renovating the building and converting parts of it into a seven star hotel and luxury apartment block. However, it said the offer was just too attractive to turn down.

Wow, that is a lot of money. So how is it spending the profits?

Well the company has said it is looking to expand into Europe's tourism industry and recently agreed to buy and refurbish the Royal Monceau hotel in Paris. Barwa didn't say how much it paid for the 1928 hotel near the Arc de Triomphe but did say that it would be refurbishing the hotel - that's what it said last time though. In June the company also said it was considering investing in Sudan.

But it's a Qatari company. Is it doing anything locally?

Yes it is. Barwa is currently constructing 2000 low-rent house on the outskirts of Doha, available only to low and middle-income expats, which should be available from March next year. It also recently announced plans to open its own bank, Barwa Real Estate Bank, which will be Qatar's first bank dedicated to the real estate and construction industry.

Okay, finally, Barwa's opening a bank. How's that progressing?

Well, it has already received regulatory support and approval and it hopes to start trading in the first quarter of next year. It already has an initial capital of US$275m and paid up capital of US$140m, and will be 100% owned by Barwa.

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