Bridging US Law and Islamic Finance
Deploying capital into US real estate while adhering to Sharia principles requires reconciling common-law property rights with Islamic prohibitions on Riba (interest), Gharar (excessive uncertainty), and Haram activities.
The Ijara Structure
The most common structure for core/core-plus US assets is the Ijara (lease) model. Instead of a traditional interest-bearing mortgage, a Sharia-compliant financier purchases the asset (or a portion of it) and leases it back to the investor. The lease payments mirror the economics of principal and interest.
Asset Class Screening
Strict tenant screening is required. A typical Sharia mandate prohibits assets where more than 5% of gross revenue is derived from non-compliant activities (e.g., alcohol sales, conventional banking, gambling). This makes logistics, industrial, and multifamily the preferred asset classes over hospitality or retail.