Australia sees nascent growth in Islamic finance despite tax concerns
National Australia Bank completes three deals while unit of Malaysian pilgrim fund also active in the country
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, one of the most active banks in the sector, this month helped fund a A$160 million (HK$885 million) Brisbane property purchase, its third Islamic financing transaction since August.
“We saw a lot of interest from Islamic investors who wanted to invest in Australia but they had to borrow from Islamic banks offshore. This was often expensive and complex,” said Imran Lum, NAB’s associate director of Islamic capital markets.
“It’s not only in commercial property, we’re also seeing an interest in Australian agriculture and infrastructure assets,” he said.
While the emergence of such deals represents a breakthrough for Gulf and Southeast Asian investors, questions remain over how much momentum will develop as Australia has yet to follow the lead of other jurisdictions like Britain and Hong Kong in passing tax law amendments to facilitate Islamic finance.
