Qatar Real Estate in $275mn Islamic financing deal

QATARI DEVELOPMENT: Picture of landmark towers in Doha. (Getty Images)

Qatar National Bank's Islamic branch and Qatar International Islamic Bank signed on Tuesday a 1 billion riyal ($275 million) Islamic financing deal with Qatar Real Estate Investment Co.

They said in a statement the funds would go to future Qatar Real Estate developments in the Gulf Arab country, which is the world's biggest exporter of liquefied natural gas, estimated to be worth 2.5 billion riyals.

The announcement of the Islamic financing or ijara deal comes at a time when real estate developers in the nearby United Arab Emirates scale back major projects as the global financial crisis freezes credit lines and hits demand.

Some analysts have said that Islamic financing could receive a boost as conventional credit markets suffer, because Islam bans interest and favours revenue derived from underlying physical assets.

QNB Al Islami will contribute 700 million riyals and Qatar International Islamic 300 million in the deal which comes into effect in January.

QNB Al Islami was previously mandated to lead arrange an Islamic finance deal worth 1.37 billion riyals for Qatar Real Estate, which was Qatar's first corporate sukuk and used to fund property projects in Qatar.

Qatar Real Estate said in February it planned to borrow funds by the third quarter, possibly by selling Islamic bonds, to finance up to 3 billion riyals of projects.

The government of Qatar owns 27 percent of Qatar Real Estate. (Reuters)

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