Scribd
Upload
309 views2 pages

Reit Assignment

This document provides an overview of Islamic real estate investment trusts (i-REITs) and compares them to conventional REITs. I-REITs are collective investment schemes that invest in real estate assets in accordance with Sharia law. While i-REITs and conventional REITs share similarities in terms of tax treatment, structure, and regulatory framework, there are key differences for i-REITs including requirements to have a Sharia advisory committee, comply with Sharia criteria, and use Takaful insurance instead of conventional insurance. The document also discusses steps that could be taken to further develop and promote i-REITs as an investment option in Muslim countries.

Uploaded by

GonzQlua
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
309 views2 pages

Reit Assignment

This document provides an overview of Islamic real estate investment trusts (i-REITs) and compares them to conventional REITs. I-REITs are collective investment schemes that invest in real estate assets in accordance with Sharia law. While i-REITs and conventional REITs share similarities in terms of tax treatment, structure, and regulatory framework, there are key differences for i-REITs including requirements to have a Sharia advisory committee, comply with Sharia criteria, and use Takaful insurance instead of conventional insurance. The document also discusses steps that could be taken to further develop and promote i-REITs as an investment option in Muslim countries.

Uploaded by

GonzQlua
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

ECON 6862 ISLAMIC CAPITAL MARKET SECTION 1

PREPARED FOR: PROF.HASSANUDDEEN ABD. AZIZ

MUHAMMAD ADITHIO KURNIAWAN (G1129629) ABDULLAH USSI (G1114696) MUNDZIR AL-GHAZALI (G

ISLAMIC REAL ESTATE INVESTMENT TRUST EXECUTIVE SUMMARY

Conventionally, it is a security sells like stocks, which is known to be collective investment scheme and invested in real estate assets such as offices, hotels, warehouse, houses and shopping centre. REITs received special tax consideration. It has a high yield of return with a high liquidity degree. Usually, companies invest their fund in REIT for tax purposes and one of its unique characteristics is that it has to distribute 90 percent of its income to the investors. It can be classified as equity, mortgage and hybrid. Also, the objectives of REITs are maintaining liquidity of the company, making good return from the high yield and diversity of investment with high liquidity of investment, making REIT becomes more attractive in the eye of investors. In Islamic point of view, it is a collective investment scheme in real estate which its operational procedure activities do not violate and is according to the sharia law prescribed in the Quran and Sunnah. Following its conventional counterpart, Islamic REIT shares the same roles and objectives but a bit different in terms of its characteristics since Islamic REIT has to follow shariah ruling in its operational procedure. Based on the work of ting kien hwa and Abdurrahman Md. Noor (2007), some similarities of both conventional and Islamic REIT can be found in terms of its tax treatment, structure and regulatory framework. Both conventional and Islamic REIT has pay its corporate tax, stamp duty and property gain tax, in its structure, both conventional and Islamic share the same requirements and lastly, both REIT follow the same guidelines from SC but there are more guidelines in Islamic REIT since it should attach itself from the Sharia rulings. There are several differences between the conventional and Islamic REIT; they be assessed firstly from the aspect of its shariah committee or advisory, conventionally it is unnecessary to have a shariah committee since the existence of a Shariah committee will ensure a Shariah compliancy of the product. The system runs based on interest while in Islamic REIT it is a necessity to have a Shariah committee. Secondly, Islamic REIT has Shariah compliance criteria. It is needed to make sure that the tenants are following the Shariah rulings while bringing their operational activities. Another difference between Islamic and conventional REIT is the insurance of properties. In conventional system, the property can be insured in both conventional and takaful way, but in Islamic REIT, insurance can only be done through Takaful Company and not conventional Insurance Company. lastly, in terms of financing, it is obvious that in Conventional REIT, it does not emphasize and rather gives a freedom of whatever finance that will be used as long as it turns out to profit and not loss while in Islamic REIT, the financing part should always be shariah compliant. There are various ways forward for Islamic REIT to develop more and become a new way of investment in the Muslim countries instead of using the conventional one. Several steps need to be taken. Establishing a better environment for investors to invest in Islamic is one way to change the paradigm of Islamic REIT to the investors, this can be done through making a clear and transparent regulatory framework which more comprehensive than before, improving the quality management is also deemed to be the necessary step to be taken by i-REIT companies. Furthermore, more production innovations are the best way to attract more investors to invest their fund in Islamic REIT.

You might also like