Australia has begun to see a steady stream of property deals using Islamic financing as the attraction of low-risk tenants and a weak Australian dollar offset concerns about the lack of a welcoming tax environment for such transactions.
National Australia Bank Ltd, one of the most active banks in the sector, this month helped fund a A$160 million ($114 million) Brisbane property purchase, its third Islamic financing transaction since August.
Australia is set to become the newest entrant to the Islamic debt market this year as a solar-power joint venture seeks to sell a debut sukuk in Malaysia’s offshore tax haven of Labuan.
SGI-Mitabu, run by The Solar Guys International and Mitabu Australia Pty, has revived a plan to offer A$150 million (RM415 million) of the securities in the third quarter to finance the building of a plant in Indonesia, M. Rusydi, Mitabu’s director, said by phone from Brisbane on February 10. The company is coming to Malaysia because Australia still hasn’t approved laws allowing for the sale of sukuk since first proposing a plan in 2010.
First-time sellers of bonds that adhere to Islam’s ban on interest are poised to revive an industry suffering its worst quarter in more than four years.
Luxembourg and Hong Kong aim to market debut offerings of sukuk next month, while , , and Tatarstan have announced plans for maiden issues. Islamic bond sales have fallen 82 percent to $2.6 billion this quarter compared with the previous three months, their lowest level since the first three months of 2010, according to data compiled by Bloomberg.
Melbourne-based First Guardian plans to launch an Islamic pension fund in January, collaborating with some of Australia’s most well-known Muslim organisations to tap the country’s $1.5 trillion private pension system, the world’s fourth largest.
The fund has received regulatory approval and documentation is in the final stages, said Almir Colan, director at the Australian Centre for Islamic Finance who worked with First Guardian in the design of the product.
The prospect of higher yield in Australia is driving Islamic investors Down Under just as it is the broader global investment community, but the focus on capital-intensive industries is adding to its appeal for this source of funds.
Managers of two fledging Islamic funds set up in Australia in the past 18 months say they knew these factors presented opportunities, but they were still surprised by the level of interest from Islamic investors.
The Board of Taxation has submitted its final report into Australia's tax laws to ensure they do not inhibit the provision of Islamic finance, banking and insurance products, Parliamentary Secretary Bernie Ripoll has told the Amanie Australia Islamic Finance Forum in Melbourne.
The report was based on recommendations in the 2010 Johnson Report which offered policy options to better position Australia as a financial centre.
SGI-Mitabu, a consortium of two Brisbane solar companies, will finance its entire Indonesian solar power project using sharia-compliant financing, starting in July with an offshore-domiciled sukuk, or Islamic bond, a senior executive said.
The deal is set to be Australia's first issuance of sukuk, a market that expects global demand to reach $421 billion by 2016 from $240 billion in 2012, according to a Thomson Reuters report.
Australian fund manager Crescent Wealth launched the country's first Islamic pension fund, through a deal with the Association of Independently Owned Financial Professionals (AIOFP), the company said on Monday.
Crescent Wealth aims to tap Australia's large pension industry, which had A$1.3 trillion ($1.4 trillion) in assets at the end of 2011, according to the Australian Prudential Regulation Authority.
A Shariah-compliant forestry fund has been launched by Sustainable Capital which is based in Luxembourg in order to lure Islamic investors along with those interested in green investment.
Sydney: A Shariah-compliant forestry fund has been launched by Sustainable Capital which is based in Luxembourg in order to lure Islamic investors along with those interested in green investment.
The government of the Australian state of New South Wales, home to the country's financial capital Sydney, will send a group to Dubai this week to discuss ways to develop the Islamic finance industry, officials said.
The delegation, led by New South Wales premier Barry O'Farrell and including financial services professionals, will explore regulatory and legal issues at a roundtable discussion with the Dubai Export Development Corp on Tuesday.