and real estate in France
Comprehension and action
A white paper written jointly by Norton Rose LLP
and DTZ Asset Management
A strong potential market still unexploited in France
The French Islamic finance market is still in its infancy and has, until now, been driven by investment in the corporate real estate sector (offices, warehouses and shops) and a potential extension into residential real estate. Between 2003 and 2008, DTZ Asset Management estimated that the combined volume of Shariah compliant real estate investments carried out in France represented just under €3 billion, for around 40 transactions.
From this analysis, it appears that the development of this alternative ethical financing calls for the French tax and legal framework to be adapted to take into account the constraints of Islamic finance.
In late 2009, Norton Rose LLP Paris and DTZ Asset Management organised a series of workshops bringing together experts such as corporate representatives, advisors, religious experts and public and local representatives. The dual purpose was to establish a status report on current practices in Islamic finance and to formulate proposals intended to facilitate its development in the French market.
This collaboration resulted in the White Paper, “Islamic finance and real estate in France”, with a foreword by Thierry Dissaux, Special Adviser to the Head of the French Treasury for Financial Affairs and Islamic Finance. The White Paper puts forward 10 concrete proposals to develop the attractiveness of France in this area.
Ten proposals to “Emerge from the circle of blame”
Facing a French market where Islamic finance is still unexploited, the White Paper tries to find a way to emerge from the “circle of blame”: None of the stakeholders -investors, real estate players or public authorities- are considering making the first step themselves. The White Paper aims to give a new light to all those who are considering Islamic finance, including its related corporate governance rules, as an opportunity given the international economic crisis.
The ten propositions have been listed as 5 headings: Communication, towards the national and international institutions, Training, in order to raise awareness among the general public, Products & Services, Legal & Fiscal for a normalized framework within the French environment and, finally, the Governance of ethical compliance committees.
In order to sustain this new alternative finance, the White Paper suggests for instance to select test projects from local authorities with genuine needs in infrastructure or local investment for SME, in order to obtain a true operational model.
There is no shortage, after all, of national and regional infrastructure, energy and capital projects (e.g. Grand Emprunt, Grand Paris, Plan Campus). The purpose is to favour new financing methods from new investors wishing to invest in Shariah-compliant projects.