EARTHLINK – A SHARIAH COMPLIANT REAL ESTATE DEVELOPMENT COMPANY
Earthlink Developments has secured a unique position in the world of real estate business due to many reasons including timely delivery of its exemplary projects, gainful policies for investors, and the credibility of its clients. Over a period of 16 years, the company has acquired a large number of entrusted clients through professional work-style under the supervision of the visionary Mr. Mubusher Hayat. His vision is insistent towards delivering Comfort, Security & Representation. Nevertheless, what makes Earthlink different from other contemporary real estate companies? The answer is the passion to provide the best to its clients; be it consultancy, a house, or a profit-oriented investment opportunity. And the outcome has always been a win-win situation as prescribed by the pioneers of this company.
Real Estate Sector & Shariah Compliance in Pakistan
Over the years, a growing interest has been observed in people as if or not their investment in the real estate sector is in accordance with the principles of Islamic financing. Being a multi-billion industry, however, real estate craves Shariah Compliance so as to address the queries of investors along with paving the way for the growth of the construction industry. Being the 2nd largest industry of Pakistan, the construction industry holds a 2.5% share in the total GDP.
Basically, Shariah Law prohibits interest-bearing transactions in which the owner of the money receives a return without making any effort. Configuring the need, religious scholars have designed certain policies to complement Shariah Compliance with the real estate sector.
There are certain policies regarding investment, for instance, one structure says that the investors will have a fixed return whereas the other structure gives the investor equity in the development and performance of the property. According to the Islamic point of view, only that form of investment is fair in which both parties have a share in risk and reward. The Securities and Exchange Commission of Pakistan (SECP) has crafted certain rules to promote Shariah Compliance in the real estate sector. The three main principles:
- The properties invested in must be used for Shariah-compliant purposes.
- The fund must avoid using leverage using methods prohibited by Shariah.
- The real estate asset must not be used for haram purposes; gambling, conventional lending activities, production, or sale of pork or alcohol.
In Pakistan, different financing structures are used to comply with Shariah; Murabaha – to finance the commercial property, Ijarah – to finance the residential property, and Istisna – used for manufacturing contract. Different real estate companies in Pakistan follow different policies in collaboration with banks; such as Diminishing Musharakh (Joint ownership of an asset where profit and loss are shared between both partners). The SECP has also provisioned that the companies will have to ensure that their interest-bearing debt-to-asset ratio should be less than 37% while the ratio of non-shariah compliant income to total revenue should be no more than 5%.
SECP hereby approved Murabaha Share Finance (MSF) for the sale transactions.
Earthlink conforms to Shariah Compliance
Earthlink has always been momentous in dealing with aspects, like a halal investment and shariah compliance, which are of great concern for its clients. To comply with the provisions of SECP and Shariah Law, Earthlink has at its bench the Shariah Advisor who makes sure that Shariah rules are obliged in letter and spirit for all the business activities of the company. The company has therefore successfully received Shariah Compliant Certificate as ruled by SECP.
Talking about the policies, Earthlink unlike other real estate companies of the country, does not offer rental returns before the project is completed as it is not permitted by Shariah Law. The business is strictly made interest (riba) free to comply with Islamic financing.
Earthlink offers Shariah Compliant policies to its investors as it values the clients and their trust in the company. Although the company offers monthly returns over investment, for instance, Gold suites of The Grande Hotel offer 50,000 monthly returns to its investors and the project has also received capital gain up to 27.27%. But the company does not give any guarantee about how much capital gain will the Grande Hotel receive in, for example, the coming three years.